Correlation Between Power Dividend and Gamco Global

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

By analyzing existing cross correlation between Power Dividend Index and Gamco Global Telecommunications, you can compare the effects of market volatilities on Power Dividend and Gamco Global 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 Power Dividend with a short position of Gamco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Dividend and Gamco Global.

Diversification Opportunities for Power Dividend and Gamco Global

0.28

Correlation Coefficient

Power Dividend  Gamco Global

Modest diversification

The 3 months correlation between Power and Gamco is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Power Dividend Index and Gamco Global Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global Telecom and Power Dividend 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 Power Dividend Index are associated (or correlated) with Gamco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Global Telecom has no effect on the direction of Power Dividend i.e., Power Dividend and Gamco Global go up and down completely randomly.

Pair Corralation between Power Dividend and Gamco Global

Assuming the 90 days horizon Power Dividend is expected to generate 1.12 times less return on investment than Gamco Global. But when comparing it to its historical volatility, Power Dividend Index is 1.03 times less risky than Gamco Global. It trades about 0.07 of its potential returns per unit of risk. Gamco Global Telecommunications is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,901  in Gamco Global Telecommunications on October 2, 2024 and sell it today you would earn a total of  268.00  from holding Gamco Global Telecommunications or generate 14.1% return on investment over 90 days.

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

Power Dividend Index  vs.  Gamco Global Telecommunication

Power Dividend Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Dividend Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Power Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gamco Global Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Power Dividend and Gamco Global

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

The idea behind Power Dividend Index and Gamco Global Telecommunications 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.