Correlation Between Nasdaq and Gamco International

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Can any of the company-specific risk be diversified away by investing in both Nasdaq and Gamco International 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 Nasdaq and Gamco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Gamco International Growth, you can compare the effects of market volatilities on Nasdaq and Gamco International 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 Nasdaq with a short position of Gamco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Gamco International.

Diversification Opportunities for Nasdaq and Gamco International

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Nasdaq and Gamco is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Gamco International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco International and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Gamco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco International has no effect on the direction of Nasdaq i.e., Nasdaq and Gamco International go up and down completely randomly.

Pair Corralation between Nasdaq and Gamco International

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.52 times more return on investment than Gamco International. However, Nasdaq is 1.52 times more volatile than Gamco International Growth. It trades about 0.05 of its potential returns per unit of risk. Gamco International Growth is currently generating about 0.02 per unit of risk. If you would invest  5,944  in Nasdaq Inc on September 13, 2024 and sell it today you would earn a total of  2,187  from holding Nasdaq Inc or generate 36.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nasdaq Inc  vs.  Gamco International Growth

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Gamco International 

Risk-Adjusted Performance

0 of 100

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

Nasdaq and Gamco International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and Gamco International

The main advantage of trading using opposite Nasdaq and Gamco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Gamco International 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 International will offset losses from the drop in Gamco International's long position.
The idea behind Nasdaq Inc and Gamco International Growth 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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