Correlation Between Gamco Global and Pimco Total

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

Diversification Opportunities for Gamco Global and Pimco Total

0.01

Correlation Coefficient

Gamco Global  Pimco Total

Significant diversification

The 3 months correlation between Gamco and Pimco is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return 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 Pimco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Gamco Global i.e., Gamco Global and Pimco Total go up and down completely randomly.

Pair Corralation between Gamco Global and Pimco Total

Assuming the 90 days horizon Gamco Global Gold is expected to generate 2.05 times more return on investment than Pimco Total. However, Gamco Global is 2.05 times more volatile than Pimco Total Return. It trades about 0.02 of its potential returns per unit of risk. Pimco Total Return is currently generating about 0.05 per unit of risk. If you would invest  384.00  in Gamco Global Gold on September 12, 2024 and sell it today you would earn a total of  31.00  from holding Gamco Global Gold or generate 8.07% return on investment over 90 days.

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

Gamco Global Gold  vs.  Pimco Total Return

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.

Pimco Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Total 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 Pimco Total

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

The idea behind Gamco Global Gold and Pimco Total Return 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.