Correlation Between Gamco Natural and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Gamco Natural and Northern Lights 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 Northern Lights 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 Northern Lights, you can compare the effects of market volatilities on Gamco Natural and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Natural and Northern Lights.
Diversification Opportunities for Gamco Natural and Northern Lights
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gamco and Northern is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Gamco Natural i.e., Gamco Natural and Northern Lights go up and down completely randomly.
Pair Corralation between Gamco Natural and Northern Lights
Assuming the 90 days horizon Gamco Natural is expected to generate 8.24 times less return on investment than Northern Lights. But when comparing it to its historical volatility, Gamco Natural Resources is 1.05 times less risky than Northern Lights. It trades about 0.02 of its potential returns per unit of risk. Northern Lights is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,112 in Northern Lights on September 2, 2024 and sell it today you would earn a total of 101.00 from holding Northern Lights or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamco Natural Resources vs. Northern Lights
Performance |
| Timeline |
| Gamco Natural Resources |
| Northern Lights |
Gamco Natural and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamco Natural and Northern Lights
The main advantage of trading using opposite Gamco Natural and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Natural position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' 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 |
| Northern Lights vs. Navigator Tactical Fixed | Northern Lights vs. Navigator Tactical Fixed | Northern Lights vs. Navigator Tactical Fixed | Northern Lights vs. Navigator Tactical Investment |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |