Correlation Between Gamco Global and American Beacon
Can any of the company-specific risk be diversified away by investing in both Gamco Global and American Beacon 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 Global and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamco Global Telecommunications and American Beacon Large, you can compare the effects of market volatilities on Gamco Global and American Beacon 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 Global with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and American Beacon.
Diversification Opportunities for Gamco Global and American Beacon
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gamco and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Telecommunication and American Beacon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Large and Gamco Global 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 Global Telecommunications are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Large has no effect on the direction of Gamco Global i.e., Gamco Global and American Beacon go up and down completely randomly.
Pair Corralation between Gamco Global and American Beacon
Assuming the 90 days horizon Gamco Global Telecommunications is expected to generate 1.12 times more return on investment than American Beacon. However, Gamco Global is 1.12 times more volatile than American Beacon Large. It trades about 0.12 of its potential returns per unit of risk. American Beacon Large is currently generating about 0.11 per unit of risk. If you would invest 1,726 in Gamco Global Telecommunications on September 12, 2024 and sell it today you would earn a total of 642.00 from holding Gamco Global Telecommunications or generate 37.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamco Global Telecommunication vs. American Beacon Large
Performance |
| Timeline |
| Gamco Global Telecom |
| American Beacon Large |
Gamco Global and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamco Global and American Beacon
The main advantage of trading using opposite Gamco Global and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Global position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Gamco Global vs. Ab Bond Inflation | Gamco Global vs. T Rowe Price | Gamco Global vs. Touchstone Premium Yield | Gamco Global vs. Blrc Sgy Mnp |
| American Beacon vs. Gamco Global Telecommunications | American Beacon vs. T Rowe Price | American Beacon vs. Dws Government Money | American Beacon vs. Counterpoint Tactical Municipal |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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