Correlation Between Embrace Change and GAMCO Natural
Can any of the company-specific risk be diversified away by investing in both Embrace Change 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 Embrace Change and GAMCO Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and GAMCO Natural Resources, you can compare the effects of market volatilities on Embrace Change 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 Embrace Change with a short position of GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and GAMCO Natural.
Diversification Opportunities for Embrace Change and GAMCO Natural
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Embrace and GAMCO is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition 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 Embrace Change 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 Embrace Change Acquisition 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 Embrace Change i.e., Embrace Change and GAMCO Natural go up and down completely randomly.
Pair Corralation between Embrace Change and GAMCO Natural
Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 0.09 times more return on investment than GAMCO Natural. However, Embrace Change Acquisition is 11.29 times less risky than GAMCO Natural. It trades about -0.21 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about -0.03 per unit of risk. If you would invest 1,170 in Embrace Change Acquisition on August 28, 2024 and sell it today you would lose (5.00) from holding Embrace Change Acquisition or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embrace Change Acquisition vs. GAMCO Natural Resources
Performance |
| Timeline |
| Embrace Change Acqui |
| GAMCO Natural Resources |
Embrace Change and GAMCO Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and GAMCO Natural
The main advantage of trading using opposite Embrace Change and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change 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 Embrace Change Acquisition 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.| GAMCO Natural vs. MFS High Income | GAMCO Natural vs. MFS Investment Grade | GAMCO Natural vs. Eaton Vance National | GAMCO Natural vs. Invesco High Income |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |