Correlation Between GAMCO Natural and FAM
Can any of the company-specific risk be diversified away by investing in both GAMCO Natural and FAM 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 FAM 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 FAM, you can compare the effects of market volatilities on GAMCO Natural and FAM 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 FAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Natural and FAM.
Diversification Opportunities for GAMCO Natural and FAM
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between GAMCO and FAM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and FAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAM 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 FAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAM has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and FAM go up and down completely randomly.
Pair Corralation between GAMCO Natural and FAM
Considering the 90-day investment horizon GAMCO Natural is expected to generate 1.23 times less return on investment than FAM. In addition to that, GAMCO Natural is 1.48 times more volatile than FAM. It trades about 0.05 of its total potential returns per unit of risk. FAM is currently generating about 0.09 per unit of volatility. If you would invest 490.00 in FAM on September 4, 2024 and sell it today you would earn a total of 184.00 from holding FAM or generate 37.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.1% |
| Values | Daily Returns |
GAMCO Natural Resources vs. FAM
Performance |
| Timeline |
| GAMCO Natural Resources |
| FAM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
GAMCO Natural and FAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMCO Natural and FAM
The main advantage of trading using opposite GAMCO Natural and FAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMCO Natural position performs unexpectedly, FAM 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 FAM will offset losses from the drop in FAM's long position.| GAMCO Natural vs. Visa Class A | GAMCO Natural vs. Diamond Hill Investment | GAMCO Natural vs. Distoken Acquisition | GAMCO Natural vs. AllianceBernstein Holding LP |
| FAM vs. Brookfield Real Assets | FAM vs. Guggenheim Strategic Opportunities | FAM vs. Cornerstone Strategic Return | FAM vs. Cornerstone Strategic Value |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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