Correlation Between GAMCO Natural and Pimco New

Can any of the company-specific risk be diversified away by investing in both GAMCO Natural and Pimco New at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GAMCO Natural and Pimco New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GAMCO Natural Resources and Pimco New York, you can compare the effects of market volatilities on GAMCO Natural and Pimco New and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GAMCO Natural with a short position of Pimco New. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Natural and Pimco New.

Diversification Opportunities for GAMCO Natural and Pimco New

0.56

Correlation Coefficient

GAMCO Natural  Pimco New

Very weak diversification

The 3 months correlation between GAMCO and Pimco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York and GAMCO Natural is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GAMCO Natural Resources are associated (or correlated) with Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and Pimco New go up and down completely randomly.

Pair Corralation between GAMCO Natural and Pimco New

Considering the 90-day investment horizon GAMCO Natural Resources is expected to generate 1.34 times more return on investment than Pimco New. However, GAMCO Natural is 1.34 times more volatile than Pimco New York. It trades about 0.24 of its potential returns per unit of risk. Pimco New York is currently generating about 0.04 per unit of risk. If you would invest  531.00  in GAMCO Natural Resources on December 26, 2024 and sell it today you would earn a total of  67.00  from holding GAMCO Natural Resources or generate 12.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

GAMCO Natural Resources  vs.  Pimco New York

GAMCO Natural Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, GAMCO Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pimco New York

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco New York are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Pimco New is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GAMCO Natural and Pimco New

The main advantage of trading using opposite GAMCO Natural and Pimco New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMCO Natural position performs unexpectedly, Pimco New can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pimco New will offset losses from the drop in Pimco New's long position.

The idea behind GAMCO Natural Resources and Pimco New York pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.