Correlation Between Gamco Global and Smead Funds

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

Diversification Opportunities for Gamco Global and Smead Funds

0.95

Correlation Coefficient

Gamco Global  Smead Funds

Almost no diversification

The 3 months correlation between Gamco and Smead is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Smead Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Funds Trust 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 Smead Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Funds Trust has no effect on the direction of Gamco Global i.e., Gamco Global and Smead Funds go up and down completely randomly.

Pair Corralation between Gamco Global and Smead Funds

Assuming the 90 days horizon Gamco Global Gold is expected to generate 0.71 times more return on investment than Smead Funds. However, Gamco Global Gold is 1.4 times less risky than Smead Funds. It trades about 0.3 of its potential returns per unit of risk. Smead Funds Trust is currently generating about 0.15 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 Strong
Accuracy	100.0%
Values	Daily Returns

Gamco Global Gold  vs.  Smead Funds Trust

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.

Smead Funds Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smead Funds Trust are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Smead Funds may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gamco Global and Smead Funds

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

The idea behind Gamco Global Gold and Smead Funds Trust 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.