Correlation Between Undiscovered Managers and 1290 Gamco

Can any of the company-specific risk be diversified away by investing in both Undiscovered Managers and 1290 Gamco 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 Undiscovered Managers and 1290 Gamco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Undiscovered Managers Behavioral and 1290 Gamco Smallmid, you can compare the effects of market volatilities on Undiscovered Managers and 1290 Gamco 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 Undiscovered Managers with a short position of 1290 Gamco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Undiscovered Managers and 1290 Gamco.

Diversification Opportunities for Undiscovered Managers and 1290 Gamco

0.97

Correlation Coefficient

Undiscovered Managers  1290 Gamco

Almost no diversification

The 3 months correlation between UNDISCOVERED and 1290 is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Undiscovered Managers Behavior and 1290 Gamco Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Gamco Smallmid and Undiscovered Managers 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 Undiscovered Managers Behavioral are associated (or correlated) with 1290 Gamco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Gamco Smallmid has no effect on the direction of Undiscovered Managers i.e., Undiscovered Managers and 1290 Gamco go up and down completely randomly.

Pair Corralation between Undiscovered Managers and 1290 Gamco

Assuming the 90 days horizon Undiscovered Managers Behavioral is expected to under-perform the 1290 Gamco. In addition to that, Undiscovered Managers is 1.02 times more volatile than 1290 Gamco Smallmid. It trades about -0.21 of its total potential returns per unit of risk. 1290 Gamco Smallmid is currently generating about -0.16 per unit of volatility. If you would invest  1,728  in 1290 Gamco Smallmid on November 28, 2024 and sell it today you would lose (50.00) from holding 1290 Gamco Smallmid or give up 2.89% of portfolio value over 90 days.

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

Undiscovered Managers Behavior  vs.  1290 Gamco Smallmid

Undiscovered Managers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Undiscovered Managers Behavioral has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

1290 Gamco Smallmid

Risk-Adjusted Performance

Very Weak

Over the last 90 days 1290 Gamco Smallmid has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Undiscovered Managers and 1290 Gamco

The main advantage of trading using opposite Undiscovered Managers and 1290 Gamco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Undiscovered Managers position performs unexpectedly, 1290 Gamco 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 1290 Gamco will offset losses from the drop in 1290 Gamco's long position.

The idea behind Undiscovered Managers Behavioral and 1290 Gamco Smallmid 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.