Correlation Between Gamco Natural and Science Technology

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

Diversification Opportunities for Gamco Natural and Science Technology

-0.61

Correlation Coefficient

Gamco Natural  Science Technology

Excellent diversification

The 3 months correlation between Gamco and Science is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Technology 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 Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of Gamco Natural i.e., Gamco Natural and Science Technology go up and down completely randomly.

Pair Corralation between Gamco Natural and Science Technology

Assuming the 90 days horizon Gamco Natural Resources is expected to under-perform the Science Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gamco Natural Resources is 1.43 times less risky than Science Technology. The mutual fund trades about -0.32 of its potential returns per unit of risk. The Science Technology Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,814  in Science Technology Fund on September 21, 2024 and sell it today you would earn a total of  37.00  from holding Science Technology Fund or generate 1.31% return on investment over 90 days.

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

Gamco Natural Resources  vs.  Science Technology Fund

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.

Science Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Science Technology Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Science Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gamco Natural and Science Technology

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

The idea behind Gamco Natural Resources and Science Technology Fund 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.