Correlation Between Gamco Natural and Rbc Microcap

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

Diversification Opportunities for Gamco Natural and Rbc Microcap

0.29

Correlation Coefficient

Gamco Natural  Rbc Microcap

Modest diversification

The 3 months correlation between Gamco and Rbc is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Rbc Microcap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Microcap Value 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 Rbc Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Microcap Value has no effect on the direction of Gamco Natural i.e., Gamco Natural and Rbc Microcap go up and down completely randomly.

Pair Corralation between Gamco Natural and Rbc Microcap

Assuming the 90 days horizon Gamco Natural Resources is expected to generate 0.56 times more return on investment than Rbc Microcap. However, Gamco Natural Resources is 1.79 times less risky than Rbc Microcap. It trades about -0.01 of its potential returns per unit of risk. Rbc Microcap Value is currently generating about -0.16 per unit of risk. If you would invest  636.00  in Gamco Natural Resources on December 5, 2024 and sell it today you would lose (1.00) from holding Gamco Natural Resources or give up 0.16% of portfolio value over 90 days.

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

Gamco Natural Resources  vs.  Rbc Microcap Value

Gamco Natural Resources

Risk-Adjusted Performance

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 fairly strong basic indicators, Gamco Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rbc Microcap Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rbc Microcap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Gamco Natural and Rbc Microcap

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

The idea behind Gamco Natural Resources and Rbc Microcap Value 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.