Correlation Between Gamco Natural and World Energy
Can any of the company-specific risk be diversified away by investing in both Gamco Natural and World Energy 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 World Energy 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 World Energy Fund, you can compare the effects of market volatilities on Gamco Natural and World Energy 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 World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Natural and World Energy.
Diversification Opportunities for Gamco Natural and World Energy
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gamco and World is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy 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 World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Gamco Natural i.e., Gamco Natural and World Energy go up and down completely randomly.
Pair Corralation between Gamco Natural and World Energy
Assuming the 90 days horizon Gamco Natural Resources is expected to under-perform the World Energy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gamco Natural Resources is 1.57 times less risky than World Energy. The mutual fund trades about -0.16 of its potential returns per unit of risk. The World Energy Fund is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,426 in World Energy Fund on August 29, 2024 and sell it today you would earn a total of 111.00 from holding World Energy Fund or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gamco Natural Resources vs. World Energy Fund
Performance |
| Timeline |
| Gamco Natural Resources |
| World Energy |
Gamco Natural and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamco Natural and World Energy
The main advantage of trading using opposite Gamco Natural and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Natural position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Gamco Natural vs. Vanguard Total Stock | Gamco Natural vs. Vanguard 500 Index | Gamco Natural vs. Vanguard Total Stock | Gamco Natural vs. Vanguard Total Stock |
| World Energy vs. Fidelity Advisor Energy | World Energy vs. Fidelity Advisor Energy | World Energy vs. HUMANA INC | World Energy vs. Aquagold International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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