Correlation Between Gamco Global and Emerging Markets

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

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

Diversification Opportunities for Gamco Global and Emerging Markets

0.78

Correlation Coefficient

Gamco Global  Emerging Markets

Poor diversification

The 3 months correlation between Gamco and Emerging is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and Gamco 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 Gamco Global Gold are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Por has no effect on the direction of Gamco Global i.e., Gamco Global and Emerging Markets go up and down completely randomly.

Pair Corralation between Gamco Global and Emerging Markets

Assuming the 90 days horizon Gamco Global is expected to generate 24.92 times less return on investment than Emerging Markets. In addition to that, Gamco Global is 1.84 times more volatile than Emerging Markets Portfolio. It trades about 0.0 of its total potential returns per unit of risk. Emerging Markets Portfolio is currently generating about 0.22 per unit of volatility. If you would invest  2,110  in Emerging Markets Portfolio on September 15, 2024 and sell it today you would earn a total of  53.00  from holding Emerging Markets Portfolio or generate 2.51% return on investment over 90 days.

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

Gamco Global Gold  vs.  Emerging Markets Portfolio

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.

Emerging Markets Por

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets Portfolio are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gamco Global and Emerging Markets

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

The idea behind Gamco Global Gold and Emerging Markets Portfolio 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.