Correlation Between GAMCO Natural and Gabelli Equity
Can any of the company-specific risk be diversified away by investing in both GAMCO Natural and Gabelli Equity 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 Natural and Gabelli Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMCO Natural Resources and The Gabelli Equity, you can compare the effects of market volatilities on GAMCO Natural and Gabelli Equity 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 Natural with a short position of Gabelli Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Natural and Gabelli Equity.
Diversification Opportunities for GAMCO Natural and Gabelli Equity
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GAMCO and Gabelli is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and GAMCO Natural 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 Natural Resources are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and Gabelli Equity go up and down completely randomly.
Pair Corralation between GAMCO Natural and Gabelli Equity
Assuming the 90 days trading horizon GAMCO Natural Resources is expected to under-perform the Gabelli Equity. But the preferred stock apears to be less risky and, when comparing its historical volatility, GAMCO Natural Resources is 1.3 times less risky than Gabelli Equity. The preferred stock trades about -0.18 of its potential returns per unit of risk. The The Gabelli Equity is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,339 in The Gabelli Equity on August 25, 2024 and sell it today you would lose (38.00) from holding The Gabelli Equity or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMCO Natural Resources vs. The Gabelli Equity
Performance |
| Timeline |
| GAMCO Natural Resources |
| Gabelli Equity |
GAMCO Natural and Gabelli Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMCO Natural and Gabelli Equity
The main advantage of trading using opposite GAMCO Natural and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMCO Natural position performs unexpectedly, Gabelli Equity 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 Gabelli Equity will offset losses from the drop in Gabelli Equity's long position.| GAMCO Natural vs. The Gabelli Multimedia | GAMCO Natural vs. The Gabelli Equity | GAMCO Natural vs. Virtus AllianzGI Convertible | GAMCO Natural vs. John Hancock Income |
| Gabelli Equity vs. The Gabelli Multimedia | Gabelli Equity vs. The Gabelli Equity | Gabelli Equity vs. The Gabelli Multimedia | Gabelli Equity vs. The Gabelli Dividend |
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 Correlations module to find global opportunities by holding instruments from different markets.
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