Correlation Between Virtus AllianzGI and GAMCO Natural

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

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

Diversification Opportunities for Virtus AllianzGI and GAMCO Natural

0.89

Correlation Coefficient

Virtus AllianzGI  GAMCO Natural

Very poor diversification

The 3 months correlation between Virtus and GAMCO is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Virtus AllianzGI Convertible 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 Virtus AllianzGI 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 Virtus AllianzGI Convertible 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 Virtus AllianzGI i.e., Virtus AllianzGI and GAMCO Natural go up and down completely randomly.

Pair Corralation between Virtus AllianzGI and GAMCO Natural

Assuming the 90 days trading horizon Virtus AllianzGI Convertible is expected to generate 0.67 times more return on investment than GAMCO Natural. However, Virtus AllianzGI Convertible is 1.49 times less risky than GAMCO Natural. It trades about -0.28 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about -0.29 per unit of risk. If you would invest  2,175  in Virtus AllianzGI Convertible on September 21, 2024 and sell it today you would lose (52.00) from holding Virtus AllianzGI Convertible or give up 2.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Virtus AllianzGI Convertible  vs.  GAMCO Natural Resources

Virtus AllianzGI Con

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus AllianzGI Convertible has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

GAMCO Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Natural Resources 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 Virtus AllianzGI and GAMCO Natural

The main advantage of trading using opposite Virtus AllianzGI and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus AllianzGI 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 Virtus AllianzGI Convertible 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.