Correlation Between Gamco Natural and Sit Global

Can any of the company-specific risk be diversified away by investing in both Gamco Natural and Sit Global 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 Natural and Sit Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gamco Natural Resources and Sit Global Dividend, you can compare the effects of market volatilities on Gamco Natural and Sit Global 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 Natural with a short position of Sit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Natural and Sit Global.

Diversification Opportunities for Gamco Natural and Sit Global

0.12

Correlation Coefficient

Gamco Natural  Sit Global

Average diversification

The 3 months correlation between Gamco and Sit is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Sit Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Global Dividend and Gamco Natural 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 Natural Resources are associated (or correlated) with Sit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Global Dividend has no effect on the direction of Gamco Natural i.e., Gamco Natural and Sit Global go up and down completely randomly.

Pair Corralation between Gamco Natural and Sit Global

Assuming the 90 days horizon Gamco Natural Resources is expected to under-perform the Sit Global. In addition to that, Gamco Natural is 1.06 times more volatile than Sit Global Dividend. It trades about -0.29 of its total potential returns per unit of risk. Sit Global Dividend is currently generating about -0.01 per unit of volatility. If you would invest  2,842  in Sit Global Dividend on September 27, 2024 and sell it today you would lose (10.00) from holding Sit Global Dividend or give up 0.35% of portfolio value over 90 days.

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

Gamco Natural Resources  vs.  Sit Global Dividend

Gamco Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sit Global Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sit Global Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sit Global 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 Natural and Sit Global

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

The idea behind Gamco Natural Resources and Sit Global Dividend 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.