Correlation Between Mfs Aggressive and Gamco Natural

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

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

Diversification Opportunities for Mfs Aggressive and Gamco Natural

0.52

Correlation Coefficient

Mfs Aggressive  Gamco Natural

Very weak diversification

The 3 months correlation between Mfs and Gamco is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Aggressive Growth 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 Mfs Aggressive 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 Mfs Aggressive Growth 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 Mfs Aggressive i.e., Mfs Aggressive and Gamco Natural go up and down completely randomly.

Pair Corralation between Mfs Aggressive and Gamco Natural

Assuming the 90 days horizon Mfs Aggressive Growth is expected to under-perform the Gamco Natural. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs Aggressive Growth is 1.01 times less risky than Gamco Natural. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Gamco Natural Resources is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  644.00  in Gamco Natural Resources on December 2, 2024 and sell it today you would lose (4.00) from holding Gamco Natural Resources or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mfs Aggressive Growth  vs.  Gamco Natural Resources

Mfs Aggressive Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Mfs Aggressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gamco Natural Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gamco Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gamco Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mfs Aggressive and Gamco Natural

The main advantage of trading using opposite Mfs Aggressive and Gamco Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Aggressive 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 Mfs Aggressive Growth 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.