Correlation Between General American and Bancroft Fund
Can any of the company-specific risk be diversified away by investing in both General American and Bancroft Fund 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 General American and Bancroft Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General American Investors and Bancroft Fund, you can compare the effects of market volatilities on General American and Bancroft Fund 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 General American with a short position of Bancroft Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of General American and Bancroft Fund.
Diversification Opportunities for General American and Bancroft Fund
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between General and Bancroft is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding General American Investors and Bancroft Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancroft Fund and General American 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 General American Investors are associated (or correlated) with Bancroft Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancroft Fund has no effect on the direction of General American i.e., General American and Bancroft Fund go up and down completely randomly.
Pair Corralation between General American and Bancroft Fund
Assuming the 90 days trading horizon General American is expected to generate 1.42 times less return on investment than Bancroft Fund. But when comparing it to its historical volatility, General American Investors is 1.76 times less risky than Bancroft Fund. It trades about 0.05 of its potential returns per unit of risk. Bancroft Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,088 in Bancroft Fund on August 28, 2024 and sell it today you would earn a total of 314.00 from holding Bancroft Fund or generate 15.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.58% |
| Values | Daily Returns |
General American Investors vs. Bancroft Fund
Performance |
| Timeline |
| General American Inv |
| Bancroft Fund |
General American and Bancroft Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General American and Bancroft Fund
The main advantage of trading using opposite General American and Bancroft Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General American position performs unexpectedly, Bancroft Fund 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 Bancroft Fund will offset losses from the drop in Bancroft Fund's long position.| General American vs. The Gabelli Equity | General American vs. The Gabelli Equity | General American vs. The Gabelli Utility | General American vs. GAMCO Global Gold |
| Bancroft Fund vs. The Gabelli Equity | Bancroft Fund vs. The Gabelli Equity | Bancroft Fund vs. The Gabelli Utility | Bancroft Fund vs. GAMCO Global Gold |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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