Correlation Between ArcelorMittal and GAMCO Global

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

By analyzing existing cross correlation between ArcelorMittal SA ADR and GAMCO Global Gold, you can compare the effects of market volatilities on ArcelorMittal and GAMCO Global 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 ArcelorMittal with a short position of GAMCO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and GAMCO Global.

Diversification Opportunities for ArcelorMittal and GAMCO Global

-0.39

Correlation Coefficient

ArcelorMittal  GAMCO Global

Very good diversification

The 3 months correlation between ArcelorMittal and GAMCO is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA ADR and GAMCO Global Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Global Gold and ArcelorMittal 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 ArcelorMittal SA ADR are associated (or correlated) with GAMCO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Global Gold has no effect on the direction of ArcelorMittal i.e., ArcelorMittal and GAMCO Global go up and down completely randomly.

Pair Corralation between ArcelorMittal and GAMCO Global

Allowing for the 90-day total investment horizon ArcelorMittal SA ADR is expected to generate 1.89 times more return on investment than GAMCO Global. However, ArcelorMittal is 1.89 times more volatile than GAMCO Global Gold. It trades about 0.02 of its potential returns per unit of risk. GAMCO Global Gold is currently generating about -0.17 per unit of risk. If you would invest  2,413  in ArcelorMittal SA ADR on September 19, 2024 and sell it today you would earn a total of  40.00  from holding ArcelorMittal SA ADR or generate 1.66% return on investment over 90 days.

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

ArcelorMittal SA ADR  vs.  GAMCO Global Gold

ArcelorMittal SA ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ArcelorMittal is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ArcelorMittal and GAMCO Global

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

The idea behind ArcelorMittal SA ADR and GAMCO Global Gold 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.