Correlation Between Americafirst Large and Gamco Natural

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

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

Diversification Opportunities for Americafirst Large and Gamco Natural

-0.36

Correlation Coefficient

Americafirst Large  Gamco Natural

Very good diversification

The 3 months correlation between Americafirst and Gamco is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Americafirst Large Cap 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 Americafirst Large 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 Americafirst Large Cap 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 Americafirst Large i.e., Americafirst Large and Gamco Natural go up and down completely randomly.

Pair Corralation between Americafirst Large and Gamco Natural

Assuming the 90 days horizon Americafirst Large Cap is expected to under-perform the Gamco Natural. In addition to that, Americafirst Large is 2.03 times more volatile than Gamco Natural Resources. It trades about -0.07 of its total potential returns per unit of risk. Gamco Natural Resources is currently generating about 0.27 per unit of volatility. If you would invest  601.00  in Gamco Natural Resources on December 23, 2024 and sell it today you would earn a total of  64.00  from holding Gamco Natural Resources or generate 10.65% return on investment over 90 days.

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

Americafirst Large Cap  vs.  Gamco Natural Resources

Americafirst Large Cap

Risk-Adjusted Performance

Very Weak

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

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 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gamco Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Americafirst Large and Gamco Natural

The main advantage of trading using opposite Americafirst Large and Gamco Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americafirst Large 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 Americafirst Large Cap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.