Correlation Between Gamco Global and Nationwide Fund

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Can any of the company-specific risk be diversified away by investing in both Gamco Global and Nationwide 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 Nationwide 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 Nationwide Fund Institutional, you can compare the effects of market volatilities on Gamco Global and Nationwide 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 Nationwide Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Nationwide Fund.

Diversification Opportunities for Gamco Global and Nationwide Fund

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Gamco and Nationwide is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Telecommunication and Nationwide Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Fund Inst 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 Nationwide Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Fund Inst has no effect on the direction of Gamco Global i.e., Gamco Global and Nationwide Fund go up and down completely randomly.

Pair Corralation between Gamco Global and Nationwide Fund

Assuming the 90 days horizon Gamco Global Telecommunications is expected to generate 0.68 times more return on investment than Nationwide Fund. However, Gamco Global Telecommunications is 1.46 times less risky than Nationwide Fund. It trades about -0.08 of its potential returns per unit of risk. Nationwide Fund Institutional is currently generating about -0.06 per unit of risk. If you would invest  2,288  in Gamco Global Telecommunications on September 30, 2024 and sell it today you would lose (119.00) from holding Gamco Global Telecommunications or give up 5.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Gamco Global Telecommunication  vs.  Nationwide Fund Institutional

 Performance 
       Timeline  
Gamco Global Telecom 

Risk-Adjusted Performance

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Weak
 
Strong
Weak
Over the last 90 days Gamco Global Telecommunications has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gamco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Nationwide Fund Inst 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nationwide Fund Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Nationwide Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gamco Global and Nationwide Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gamco Global and Nationwide Fund

The main advantage of trading using opposite Gamco Global and Nationwide Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Global position performs unexpectedly, Nationwide 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 Nationwide Fund will offset losses from the drop in Nationwide Fund's long position.
The idea behind Gamco Global Telecommunications and Nationwide Fund Institutional 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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