Correlation Between Gabelli Multimedia and GAMCO Natural
Can any of the company-specific risk be diversified away by investing in both Gabelli Multimedia 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 Gabelli Multimedia and GAMCO Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gabelli Multimedia and GAMCO Natural Resources, you can compare the effects of market volatilities on Gabelli Multimedia 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 Gabelli Multimedia with a short position of GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabelli Multimedia and GAMCO Natural.
Diversification Opportunities for Gabelli Multimedia and GAMCO Natural
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gabelli and GAMCO is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Multimedia 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 Gabelli Multimedia 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 The Gabelli Multimedia 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 Gabelli Multimedia i.e., Gabelli Multimedia and GAMCO Natural go up and down completely randomly.
Pair Corralation between Gabelli Multimedia and GAMCO Natural
Assuming the 90 days trading horizon The Gabelli Multimedia is expected to generate 0.79 times more return on investment than GAMCO Natural. However, The Gabelli Multimedia is 1.27 times less risky than GAMCO Natural. It trades about -0.2 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about -0.23 per unit of risk. If you would invest 2,372 in The Gabelli Multimedia on August 29, 2024 and sell it today you would lose (54.00) from holding The Gabelli Multimedia or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gabelli Multimedia vs. GAMCO Natural Resources
Performance |
| Timeline |
| The Gabelli Multimedia |
| GAMCO Natural Resources |
Gabelli Multimedia and GAMCO Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gabelli Multimedia and GAMCO Natural
The main advantage of trading using opposite Gabelli Multimedia and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Multimedia 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.| Gabelli Multimedia vs. Virtus AllianzGI Convertible | Gabelli Multimedia vs. The Gabelli Equity | Gabelli Multimedia vs. Oxford Lane Capital | Gabelli Multimedia vs. The Gabelli Utility |
| GAMCO Natural vs. The Gabelli Multimedia | GAMCO Natural vs. The Gabelli Equity | GAMCO Natural vs. Virtus AllianzGI Convertible | GAMCO Natural vs. John Hancock 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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