Correlation Between Gamco Natural and Hennessy Small
Can any of the company-specific risk be diversified away by investing in both Gamco Natural and Hennessy Small 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 Hennessy Small 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 Hennessy Small Cap, you can compare the effects of market volatilities on Gamco Natural and Hennessy Small 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 Hennessy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Natural and Hennessy Small.
Diversification Opportunities for Gamco Natural and Hennessy Small
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gamco and Hennessy is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Hennessy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Small Cap 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 Hennessy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Small Cap has no effect on the direction of Gamco Natural i.e., Gamco Natural and Hennessy Small go up and down completely randomly.
Pair Corralation between Gamco Natural and Hennessy Small
Assuming the 90 days horizon Gamco Natural is expected to generate 14.66 times less return on investment than Hennessy Small. But when comparing it to its historical volatility, Gamco Natural Resources is 3.21 times less risky than Hennessy Small. It trades about 0.02 of its potential returns per unit of risk. Hennessy Small Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,560 in Hennessy Small Cap on September 2, 2024 and sell it today you would earn a total of 240.00 from holding Hennessy Small Cap or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamco Natural Resources vs. Hennessy Small Cap
Performance |
| Timeline |
| Gamco Natural Resources |
| Hennessy Small Cap |
Gamco Natural and Hennessy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamco Natural and Hennessy Small
The main advantage of trading using opposite Gamco Natural and Hennessy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Natural position performs unexpectedly, Hennessy Small 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 Hennessy Small will offset losses from the drop in Hennessy Small'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 |
| Hennessy Small vs. Davis Financial Fund | Hennessy Small vs. Davis Financial Fund | Hennessy Small vs. Goldman Sachs Financial | Hennessy Small vs. Icon Financial Fund |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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