Correlation Between General American and GAMCO Global
Can any of the company-specific risk be diversified away by investing in both General American and GAMCO Global 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 GAMCO Global 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 GAMCO Global Gold, you can compare the effects of market volatilities on General American and GAMCO Global 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 GAMCO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of General American and GAMCO Global.
Diversification Opportunities for General American and GAMCO Global
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between General and GAMCO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding General American Investors and GAMCO Global Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Global Gold 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 GAMCO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Global Gold has no effect on the direction of General American i.e., General American and GAMCO Global go up and down completely randomly.
Pair Corralation between General American and GAMCO Global
Assuming the 90 days trading horizon General American Investors is expected to generate 0.8 times more return on investment than GAMCO Global. However, General American Investors is 1.25 times less risky than GAMCO Global. It trades about -0.02 of its potential returns per unit of risk. GAMCO Global Gold is currently generating about -0.15 per unit of risk. If you would invest 2,586 in General American Investors on August 28, 2024 and sell it today you would lose (5.00) from holding General American Investors or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General American Investors vs. GAMCO Global Gold
Performance |
| Timeline |
| General American Inv |
| GAMCO Global Gold |
General American and GAMCO Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General American and GAMCO Global
The main advantage of trading using opposite General American and GAMCO Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General American position performs unexpectedly, GAMCO Global 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 Global will offset losses from the drop in GAMCO Global'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 |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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