Correlation Between Gamco Global and Inverse Russell

Can any of the company-specific risk be diversified away by investing in both Gamco Global and Inverse Russell 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 Inverse Russell 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 Inverse Russell 2000, you can compare the effects of market volatilities on Gamco Global and Inverse Russell 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 Inverse Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Inverse Russell.

Diversification Opportunities for Gamco Global and Inverse Russell

-0.27

Correlation Coefficient

Gamco Global  Inverse Russell

Very good diversification

The 3 months correlation between Gamco and Inverse is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Inverse Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Russell 2000 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 Inverse Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Russell 2000 has no effect on the direction of Gamco Global i.e., Gamco Global and Inverse Russell go up and down completely randomly.

Pair Corralation between Gamco Global and Inverse Russell

Assuming the 90 days horizon Gamco Global Gold is not expected to generate positive returns. However, Gamco Global Gold is 1.48 times less risky than Inverse Russell. It waists most of its returns potential to compensate for thr risk taken. Inverse Russell is generating about 0.22 per unit of risk. If you would invest  11,906  in Inverse Russell 2000 on December 2, 2024 and sell it today you would earn a total of  2,240  from holding Inverse Russell 2000 or generate 18.81% return on investment over 90 days.

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

Gamco Global Gold  vs.  Inverse Russell 2000

Gamco Global Gold

Risk-Adjusted Performance

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.

Inverse Russell 2000

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Russell 2000 are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Inverse Russell showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gamco Global and Inverse Russell

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

The idea behind Gamco Global Gold and Inverse Russell 2000 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.