Correlation Between Gamco Natural and Counterpoint Tactical

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

Diversification Opportunities for Gamco Natural and Counterpoint Tactical

0.62

Correlation Coefficient

Gamco Natural  Counterpoint Tactical

Poor diversification

The 3 months correlation between Gamco and Counterpoint is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Counterpoint Tactical Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Counterpoint Tactical 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 Counterpoint Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Counterpoint Tactical has no effect on the direction of Gamco Natural i.e., Gamco Natural and Counterpoint Tactical go up and down completely randomly.

Pair Corralation between Gamco Natural and Counterpoint Tactical

Assuming the 90 days horizon Gamco Natural Resources is expected to under-perform the Counterpoint Tactical. In addition to that, Gamco Natural is 3.78 times more volatile than Counterpoint Tactical Municipal. It trades about -0.24 of its total potential returns per unit of risk. Counterpoint Tactical Municipal is currently generating about -0.52 per unit of volatility. If you would invest  1,105  in Counterpoint Tactical Municipal on October 5, 2024 and sell it today you would lose (33.00) from holding Counterpoint Tactical Municipal or give up 2.99% of portfolio value over 90 days.

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

Gamco Natural Resources  vs.  Counterpoint Tactical Municipa

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.

Counterpoint Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Counterpoint Tactical Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Counterpoint Tactical 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 Counterpoint Tactical

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

The idea behind Gamco Natural Resources and Counterpoint Tactical Municipal 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.