Correlation Between Federated Kaufmann and Gamco Natural

Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann and Gamco Natural 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 Federated Kaufmann and Gamco Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federated Kaufmann Large and Gamco Natural Resources, you can compare the effects of market volatilities on Federated Kaufmann and Gamco Natural 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 Federated Kaufmann with a short position of Gamco Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and Gamco Natural.

Diversification Opportunities for Federated Kaufmann and Gamco Natural

-0.42

Correlation Coefficient

Federated Kaufmann  Gamco Natural

Very good diversification

The 3 months correlation between Federated and Gamco is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Large and Gamco Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Natural Resources and Federated Kaufmann 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 Federated Kaufmann Large are associated (or correlated) with Gamco Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Natural Resources has no effect on the direction of Federated Kaufmann i.e., Federated Kaufmann and Gamco Natural go up and down completely randomly.

Pair Corralation between Federated Kaufmann and Gamco Natural

Assuming the 90 days horizon Federated Kaufmann Large is expected to under-perform the Gamco Natural. In addition to that, Federated Kaufmann is 2.4 times more volatile than Gamco Natural Resources. It trades about -0.1 of its total potential returns per unit of risk. Gamco Natural Resources is currently generating about 0.32 per unit of volatility. If you would invest  597.00  in Gamco Natural Resources on December 29, 2024 and sell it today you would earn a total of  75.00  from holding Gamco Natural Resources or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Federated Kaufmann Large  vs.  Gamco Natural Resources

Federated Kaufmann Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Kaufmann Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gamco Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Federated Kaufmann and Gamco Natural

The main advantage of trading using opposite Federated Kaufmann and Gamco Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann position performs unexpectedly, Gamco Natural 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 Gamco Natural will offset losses from the drop in Gamco Natural's long position.

The idea behind Federated Kaufmann Large and Gamco Natural Resources 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.