Correlation Between Federated Premier and GAMCO Natural
Can any of the company-specific risk be diversified away by investing in both Federated Premier 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 Federated Premier and GAMCO Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Premier Municipal and GAMCO Natural Resources, you can compare the effects of market volatilities on Federated Premier 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 Federated Premier with a short position of GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and GAMCO Natural.
Diversification Opportunities for Federated Premier and GAMCO Natural
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and GAMCO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal 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 Federated Premier 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 Federated Premier Municipal 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 Federated Premier i.e., Federated Premier and GAMCO Natural go up and down completely randomly.
Pair Corralation between Federated Premier and GAMCO Natural
Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the GAMCO Natural. But the fund apears to be less risky and, when comparing its historical volatility, Federated Premier Municipal is 2.19 times less risky than GAMCO Natural. The fund trades about -0.08 of its potential returns per unit of risk. The GAMCO Natural Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 575.00 in GAMCO Natural Resources on November 2, 2024 and sell it today you would earn a total of 0.00 from holding GAMCO Natural Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. GAMCO Natural Resources
Performance |
| Timeline |
| Federated Premier |
| GAMCO Natural Resources |
Federated Premier and GAMCO Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and GAMCO Natural
The main advantage of trading using opposite Federated Premier and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier 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.| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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