Correlation Between Gamco Natural and Aqr Global

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

Diversification Opportunities for Gamco Natural and Aqr Global

0.81

Correlation Coefficient

Gamco Natural  Aqr Global

Very poor diversification

The 3 months correlation between Gamco and Aqr is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Aqr Global Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Macro 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 Aqr Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Global Macro has no effect on the direction of Gamco Natural i.e., Gamco Natural and Aqr Global go up and down completely randomly.

Pair Corralation between Gamco Natural and Aqr Global

Assuming the 90 days horizon Gamco Natural Resources is expected to generate 1.3 times more return on investment than Aqr Global. However, Gamco Natural is 1.3 times more volatile than Aqr Global Macro. It trades about 0.31 of its potential returns per unit of risk. Aqr Global Macro is currently generating about 0.28 per unit of risk. If you would invest  597.00  in Gamco Natural Resources on December 28, 2024 and sell it today you would earn a total of  72.00  from holding Gamco Natural Resources or generate 12.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Gamco Natural Resources  vs.  Aqr Global Macro

Gamco Natural Resources

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco Natural Resources are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gamco Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aqr Global Macro

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Global Macro are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gamco Natural and Aqr Global

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

The idea behind Gamco Natural Resources and Aqr Global Macro 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.