Correlation Between Gamco Natural and Pimco International
Can any of the company-specific risk be diversified away by investing in both Gamco Natural and Pimco International 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 Pimco International 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 Pimco International Fundamental, you can compare the effects of market volatilities on Gamco Natural and Pimco International 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 Pimco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Natural and Pimco International.
Diversification Opportunities for Gamco Natural and Pimco International
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gamco and Pimco is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Pimco International Fundamenta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco International 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 Pimco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco International has no effect on the direction of Gamco Natural i.e., Gamco Natural and Pimco International go up and down completely randomly.
Pair Corralation between Gamco Natural and Pimco International
Assuming the 90 days horizon Gamco Natural Resources is expected to generate 0.89 times more return on investment than Pimco International. However, Gamco Natural Resources is 1.12 times less risky than Pimco International. It trades about 0.07 of its potential returns per unit of risk. Pimco International Fundamental is currently generating about 0.04 per unit of risk. If you would invest 584.00 in Gamco Natural Resources on September 1, 2024 and sell it today you would earn a total of 59.00 from holding Gamco Natural Resources or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Gamco Natural Resources vs. Pimco International Fundamenta
Performance |
| Timeline |
| Gamco Natural Resources |
| Pimco International |
Gamco Natural and Pimco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamco Natural and Pimco International
The main advantage of trading using opposite Gamco Natural and Pimco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Natural position performs unexpectedly, Pimco International 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 Pimco International will offset losses from the drop in Pimco International'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 |
| Pimco International vs. Pimco Rae Worldwide | Pimco International vs. Pimco Rae Worldwide | Pimco International vs. Pimco Rae Worldwide | Pimco International vs. Pimco Rae Worldwide |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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