Correlation Between Nuveen Senior and GAMCO Investors

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

By analyzing existing cross correlation between Nuveen Senior Income and GAMCO Investors, you can compare the effects of market volatilities on Nuveen Senior and GAMCO Investors 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 Nuveen Senior with a short position of GAMCO Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Senior and GAMCO Investors.

Diversification Opportunities for Nuveen Senior and GAMCO Investors

0.39

Correlation Coefficient

Nuveen Senior  GAMCO Investors

Weak diversification

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

Pair Corralation between Nuveen Senior and GAMCO Investors

Considering the 90-day investment horizon Nuveen Senior is expected to generate 17.26 times less return on investment than GAMCO Investors. But when comparing it to its historical volatility, Nuveen Senior Income is 3.68 times less risky than GAMCO Investors. It trades about 0.04 of its potential returns per unit of risk. GAMCO Investors is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,539  in GAMCO Investors on September 4, 2024 and sell it today you would earn a total of  281.00  from holding GAMCO Investors or generate 18.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	25.0%
Values	Daily Returns

Nuveen Senior Income  vs.  GAMCO Investors

Nuveen Senior Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Senior Income has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent basic indicators, Nuveen Senior is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

GAMCO Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, GAMCO Investors is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nuveen Senior and GAMCO Investors

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

The idea behind Nuveen Senior Income and GAMCO Investors 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.