Correlation Between Virtus Global and GAMCO Natural

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

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

Diversification Opportunities for Virtus Global and GAMCO Natural

0.63

Correlation Coefficient

Virtus Global  GAMCO Natural

Poor diversification

The 3 months correlation between Virtus and GAMCO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Global Multi 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 Virtus Global 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 Virtus Global Multi 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 Virtus Global i.e., Virtus Global and GAMCO Natural go up and down completely randomly.

Pair Corralation between Virtus Global and GAMCO Natural

Considering the 90-day investment horizon Virtus Global Multi is expected to generate 0.56 times more return on investment than GAMCO Natural. However, Virtus Global Multi is 1.78 times less risky than GAMCO Natural. It trades about -0.31 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about -0.38 per unit of risk. If you would invest  798.00  in Virtus Global Multi on September 30, 2024 and sell it today you would lose (36.00) from holding Virtus Global Multi or give up 4.51% of portfolio value over 90 days.

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

Virtus Global Multi  vs.  GAMCO Natural Resources

Virtus Global Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Global Multi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Virtus Global is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

GAMCO Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Virtus Global and GAMCO Natural

The main advantage of trading using opposite Virtus Global and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Global 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 Virtus Global Multi 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.