Correlation Between Tax-free Conservative and Gamco Global

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

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

Diversification Opportunities for Tax-free Conservative and Gamco Global

0.5

Correlation Coefficient

Tax-free Conservative  Gamco Global

Very weak diversification

The 3 months correlation between Tax-free and Gamco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tax Free Conservative Income and The Gamco Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global and Tax-free Conservative 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 Tax Free Conservative Income 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 has no effect on the direction of Tax-free Conservative i.e., Tax-free Conservative and Gamco Global go up and down completely randomly.

Pair Corralation between Tax-free Conservative and Gamco Global

Assuming the 90 days horizon Tax-free Conservative is expected to generate 11.35 times less return on investment than Gamco Global. But when comparing it to its historical volatility, Tax Free Conservative Income is 12.76 times less risky than Gamco Global. It trades about 0.17 of its potential returns per unit of risk. The Gamco Global is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,473  in The Gamco Global on December 28, 2024 and sell it today you would earn a total of  170.00  from holding The Gamco Global or generate 6.87% return on investment over 90 days.

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

Tax Free Conservative Income  vs.  The Gamco Global

Tax Free Conservative

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Free Conservative Income are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-free Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gamco Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gamco Global are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gamco Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tax-free Conservative and Gamco Global

The main advantage of trading using opposite Tax-free Conservative and Gamco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-free Conservative 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 Tax Free Conservative Income and The Gamco Global 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.