Correlation Between The Gold and Gamco Global

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

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

Diversification Opportunities for The Gold and Gamco Global

0.61

Correlation Coefficient

The Gold  Gamco Global

Poor diversification

The 3 months correlation between The and Gamco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Gamco Global Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global Gold and The Gold 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 The Gold Bullion 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 Gold has no effect on the direction of The Gold i.e., The Gold and Gamco Global go up and down completely randomly.

Pair Corralation between The Gold and Gamco Global

Assuming the 90 days horizon The Gold is expected to generate 1.18 times less return on investment than Gamco Global. In addition to that, The Gold is 1.12 times more volatile than Gamco Global Gold. It trades about 0.37 of its total potential returns per unit of risk. Gamco Global Gold is currently generating about 0.49 per unit of volatility. If you would invest  387.00  in Gamco Global Gold on October 25, 2024 and sell it today you would earn a total of  25.00  from holding Gamco Global Gold or generate 6.46% return on investment over 90 days.

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

The Gold Bullion  vs.  Gamco Global Gold

Gold Bullion

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gamco Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamco Global Gold 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 The Gold and Gamco Global

The main advantage of trading using opposite The Gold and Gamco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gold 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 The Gold Bullion and Gamco Global Gold 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.