Correlation Between Gamco Global and Schwab Small-cap

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

Diversification Opportunities for Gamco Global and Schwab Small-cap

-0.4

Correlation Coefficient

Gamco Global  Schwab Small-cap

Very good diversification

The 3 months correlation between Gamco and Schwab is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Schwab Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Small Cap 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 Schwab Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Small Cap has no effect on the direction of Gamco Global i.e., Gamco Global and Schwab Small-cap go up and down completely randomly.

Pair Corralation between Gamco Global and Schwab Small-cap

Assuming the 90 days horizon Gamco Global Gold is expected to generate 0.58 times more return on investment than Schwab Small-cap. However, Gamco Global Gold is 1.72 times less risky than Schwab Small-cap. It trades about 0.3 of its potential returns per unit of risk. Schwab Small Cap Equity is currently generating about -0.08 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gamco Global Gold  vs.  Schwab Small Cap Equity

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.

Schwab Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schwab Small Cap Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Gamco Global and Schwab Small-cap

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

The idea behind Gamco Global Gold and Schwab Small Cap Equity 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.