Correlation Between Gamco Natural and Blue Chip

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

Diversification Opportunities for Gamco Natural and Blue Chip

-0.38

Correlation Coefficient

Gamco Natural  Blue Chip

Very good diversification

The 3 months correlation between Gamco and Blue is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Blue Chip Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Growth 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Growth has no effect on the direction of Gamco Natural i.e., Gamco Natural and Blue Chip go up and down completely randomly.

Pair Corralation between Gamco Natural and Blue Chip

Assuming the 90 days horizon Gamco Natural Resources is expected to generate 0.32 times more return on investment than Blue Chip. However, Gamco Natural Resources is 3.08 times less risky than Blue Chip. It trades about 0.29 of its potential returns per unit of risk. Blue Chip Growth is currently generating about -0.16 per unit of risk. If you would invest  598.00  in Gamco Natural Resources on December 20, 2024 and sell it today you would earn a total of  68.00  from holding Gamco Natural Resources or generate 11.37% return on investment over 90 days.

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

Gamco Natural Resources  vs.  Blue Chip Growth

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 23 (%) 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.

Blue Chip Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Chip Growth 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 fundamental 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 Blue Chip

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

The idea behind Gamco Natural Resources and Blue Chip Growth 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.