Correlation Between Pioneer Floating and GAMCO Natural

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

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

Diversification Opportunities for Pioneer Floating and GAMCO Natural

0.1

Correlation Coefficient

Pioneer Floating  GAMCO Natural

Average diversification

The 3 months correlation between Pioneer and GAMCO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Floating Rate 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 Pioneer Floating 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 Pioneer Floating Rate 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 Pioneer Floating i.e., Pioneer Floating and GAMCO Natural go up and down completely randomly.

Pair Corralation between Pioneer Floating and GAMCO Natural

Considering the 90-day investment horizon Pioneer Floating Rate is expected to under-perform the GAMCO Natural. But the etf apears to be less risky and, when comparing its historical volatility, Pioneer Floating Rate is 2.58 times less risky than GAMCO Natural. The etf trades about -0.06 of its potential returns per unit of risk. The GAMCO Natural Resources is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  531.00  in GAMCO Natural Resources on December 25, 2024 and sell it today you would earn a total of  64.00  from holding GAMCO Natural Resources or generate 12.05% return on investment over 90 days.

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

Pioneer Floating Rate  vs.  GAMCO Natural Resources

Pioneer Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Pioneer Floating is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

GAMCO Natural Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, GAMCO Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pioneer Floating and GAMCO Natural

The main advantage of trading using opposite Pioneer Floating and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Floating 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 Pioneer Floating Rate 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.