Correlation Between Focused International and Gamco Natural
Can any of the company-specific risk be diversified away by investing in both Focused International 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 Focused International and Gamco Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focused International Growth and Gamco Natural Resources, you can compare the effects of market volatilities on Focused International 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 Focused International with a short position of Gamco Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focused International and Gamco Natural.
Diversification Opportunities for Focused International and Gamco Natural
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Focused and Gamco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Focused International Growth 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 Focused International 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 Focused International Growth 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 Focused International i.e., Focused International and Gamco Natural go up and down completely randomly.
Pair Corralation between Focused International and Gamco Natural
Assuming the 90 days horizon Focused International Growth is expected to generate 1.05 times more return on investment than Gamco Natural. However, Focused International is 1.05 times more volatile than Gamco Natural Resources. It trades about 0.06 of its potential returns per unit of risk. Gamco Natural Resources is currently generating about -0.09 per unit of risk. If you would invest 1,720 in Focused International Growth on September 4, 2024 and sell it today you would earn a total of 16.00 from holding Focused International Growth or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Focused International Growth vs. Gamco Natural Resources
Performance |
| Timeline |
| Focused International |
| Gamco Natural Resources |
Focused International and Gamco Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focused International and Gamco Natural
The main advantage of trading using opposite Focused International and Gamco Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focused International 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.| Focused International vs. Value Fund Investor | Focused International vs. Ultra Fund Investor | Focused International vs. Growth Fund Investor | Focused International vs. Income Growth Fund |
| Gamco Natural vs. Huber Capital Diversified | Gamco Natural vs. Evaluator Conservative Rms | Gamco Natural vs. Prudential Core Conservative | Gamco Natural vs. Harbor Diversified International |
Check out your portfolio center.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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