Correlation Between Gamco Global and Virtus Senior

Can any of the company-specific risk be diversified away by investing in both Gamco Global and Virtus Senior 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 Virtus Senior 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 Virtus Senior Floating, you can compare the effects of market volatilities on Gamco Global and Virtus Senior 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 Virtus Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Virtus Senior.

Diversification Opportunities for Gamco Global and Virtus Senior

0.24

Correlation Coefficient

Gamco Global  Virtus Senior

Modest diversification

The 3 months correlation between Gamco and Virtus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Virtus Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Senior Floating 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 Virtus Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Senior Floating has no effect on the direction of Gamco Global i.e., Gamco Global and Virtus Senior go up and down completely randomly.

Pair Corralation between Gamco Global and Virtus Senior

Assuming the 90 days horizon Gamco Global Gold is expected to generate 5.15 times more return on investment than Virtus Senior. However, Gamco Global is 5.15 times more volatile than Virtus Senior Floating. It trades about 0.3 of its potential returns per unit of risk. Virtus Senior Floating is currently generating about 0.04 per unit of risk. If you would invest  384.00  in Gamco Global Gold on December 28, 2024 and sell it today you would earn a total of  53.00  from holding Gamco Global Gold or generate 13.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Gamco Global Gold  vs.  Virtus Senior Floating

Gamco Global Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco Global Gold are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gamco Global showed solid returns over the last few months and may actually be approaching a breakup point.

Virtus Senior Floating

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Senior Floating are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Senior 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 Virtus Senior

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

The idea behind Gamco Global Gold and Virtus Senior Floating 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.