Correlation Between Yellow Pages and GAMCO Natural

Can any of the company-specific risk be diversified away by investing in both Yellow Pages and GAMCO Natural 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 Yellow Pages and GAMCO Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yellow Pages Limited and GAMCO Natural Resources, you can compare the effects of market volatilities on Yellow Pages and GAMCO Natural 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 Yellow Pages with a short position of GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and GAMCO Natural.

Diversification Opportunities for Yellow Pages and GAMCO Natural

-0.89

Correlation Coefficient

Yellow Pages  GAMCO Natural

Pay attention - limited upside

The 3 months correlation between Yellow and GAMCO is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and GAMCO Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Natural Resources and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with GAMCO Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Natural Resources has no effect on the direction of Yellow Pages i.e., Yellow Pages and GAMCO Natural go up and down completely randomly.

Pair Corralation between Yellow Pages and GAMCO Natural

Assuming the 90 days horizon Yellow Pages Limited is expected to generate 5.3 times more return on investment than GAMCO Natural. However, Yellow Pages is 5.3 times more volatile than GAMCO Natural Resources. It trades about 0.0 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about 0.01 per unit of risk. If you would invest  1,034  in Yellow Pages Limited on October 3, 2024 and sell it today you would lose (218.00) from holding Yellow Pages Limited or give up 21.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	63.79%
Values	Daily Returns

Yellow Pages Limited  vs.  GAMCO Natural Resources

Yellow Pages Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Yellow Pages may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Yellow Pages and GAMCO Natural

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

The idea behind Yellow Pages Limited and GAMCO Natural Resources 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.