Correlation Between Gamco Global and Heritage Fund

Can any of the company-specific risk be diversified away by investing in both Gamco Global and Heritage Fund 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 Global and Heritage Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gamco Global Telecommunications and Heritage Fund A, you can compare the effects of market volatilities on Gamco Global and Heritage Fund 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 Global with a short position of Heritage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Heritage Fund.

Diversification Opportunities for Gamco Global and Heritage Fund

0.82

Correlation Coefficient

Gamco Global  Heritage Fund

Very poor diversification

The 3 months correlation between Gamco and Heritage is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Telecommunication and Heritage Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Fund A and Gamco Global 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 Global Telecommunications are associated (or correlated) with Heritage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Fund A has no effect on the direction of Gamco Global i.e., Gamco Global and Heritage Fund go up and down completely randomly.

Pair Corralation between Gamco Global and Heritage Fund

Assuming the 90 days horizon Gamco Global Telecommunications is expected to generate 0.44 times more return on investment than Heritage Fund. However, Gamco Global Telecommunications is 2.27 times less risky than Heritage Fund. It trades about 0.43 of its potential returns per unit of risk. Heritage Fund A is currently generating about 0.16 per unit of risk. If you would invest  2,294  in Gamco Global Telecommunications on September 15, 2024 and sell it today you would earn a total of  99.00  from holding Gamco Global Telecommunications or generate 4.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Gamco Global Telecommunication  vs.  Heritage Fund A

Gamco Global Telecom

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco Global Telecommunications are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gamco Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Heritage Fund A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Fund A are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Heritage Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gamco Global and Heritage Fund

The main advantage of trading using opposite Gamco Global and Heritage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Global position performs unexpectedly, Heritage Fund 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 Heritage Fund will offset losses from the drop in Heritage Fund's long position.

The idea behind Gamco Global Telecommunications and Heritage Fund A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.