Correlation Between Oak Ridge and Gamco Natural

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

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

Diversification Opportunities for Oak Ridge and Gamco Natural

0.24

Correlation Coefficient

Oak Ridge  Gamco Natural

Modest diversification

The 3 months correlation between Oak and Gamco is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Dynamic 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 Oak Ridge 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 Oak Ridge Dynamic 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 Oak Ridge i.e., Oak Ridge and Gamco Natural go up and down completely randomly.

Pair Corralation between Oak Ridge and Gamco Natural

Assuming the 90 days horizon Oak Ridge Dynamic is expected to generate 1.41 times more return on investment than Gamco Natural. However, Oak Ridge is 1.41 times more volatile than Gamco Natural Resources. It trades about 0.05 of its potential returns per unit of risk. Gamco Natural Resources is currently generating about 0.02 per unit of risk. If you would invest  1,137  in Oak Ridge Dynamic on December 2, 2024 and sell it today you would earn a total of  347.00  from holding Oak Ridge Dynamic or generate 30.52% return on investment over 90 days.

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

Oak Ridge Dynamic  vs.  Gamco Natural Resources

Oak Ridge Dynamic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oak Ridge Dynamic has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund 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 Oak Ridge and Gamco Natural

The main advantage of trading using opposite Oak Ridge and Gamco Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Ridge 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 Oak Ridge Dynamic 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.