Correlation Between Pimco New and GAMCO Natural

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

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

Diversification Opportunities for Pimco New and GAMCO Natural

0.73

Correlation Coefficient

Pimco New  GAMCO Natural

Poor diversification

The 3 months correlation between Pimco and GAMCO is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York 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 Pimco New 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 Pimco New York 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 Pimco New i.e., Pimco New and GAMCO Natural go up and down completely randomly.

Pair Corralation between Pimco New and GAMCO Natural

Considering the 90-day investment horizon Pimco New York is expected to under-perform the GAMCO Natural. But the fund apears to be less risky and, when comparing its historical volatility, Pimco New York is 1.68 times less risky than GAMCO Natural. The fund trades about -0.04 of its potential returns per unit of risk. The GAMCO Natural Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  456.00  in GAMCO Natural Resources on October 24, 2024 and sell it today you would earn a total of  120.80  from holding GAMCO Natural Resources or generate 26.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Pimco New York  vs.  GAMCO Natural Resources

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Pimco New is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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. In spite of comparatively stable basic indicators, GAMCO Natural is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pimco New and GAMCO Natural

The main advantage of trading using opposite Pimco New and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New 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 Pimco New York 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.