Correlation Between State Street and Gamco Natural
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Gamco Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Real and Gamco Natural Resources, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Gamco Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Gamco Natural.
Diversification Opportunities for State Street and Gamco Natural
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Gamco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding State Street Real 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 State Street 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 State Street Real 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 State Street i.e., State Street and Gamco Natural go up and down completely randomly.
Pair Corralation between State Street and Gamco Natural
Assuming the 90 days horizon State Street is expected to generate 2.54 times less return on investment than Gamco Natural. In addition to that, State Street is 2.1 times more volatile than Gamco Natural Resources. It trades about 0.07 of its total potential returns per unit of risk. Gamco Natural Resources is currently generating about 0.36 per unit of volatility. If you would invest 609.00 in Gamco Natural Resources on November 3, 2024 and sell it today you would earn a total of 26.00 from holding Gamco Natural Resources or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Real vs. Gamco Natural Resources
Performance |
| Timeline |
| State Street Real |
| Gamco Natural Resources |
State Street and Gamco Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Gamco Natural
The main advantage of trading using opposite State Street and Gamco Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Pace Municipal Fixed | State Street vs. Old Westbury California | State Street vs. Morningstar Municipal Bond | State Street vs. Lind Capital Partners |
| Gamco Natural vs. Jennison Natural Resources | Gamco Natural vs. Icon Natural Resources | Gamco Natural vs. Vanguard Energy Index | Gamco Natural vs. Tortoise Energy Independence |
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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