Correlation Between GAMCO Global and Nike

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

By analyzing existing cross correlation between GAMCO Global Gold and Nike Inc, you can compare the effects of market volatilities on GAMCO Global and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Global and Nike.

Diversification Opportunities for GAMCO Global and Nike

0.72

Correlation Coefficient

GAMCO Global  Nike

Poor diversification

The 3 months correlation between GAMCO and Nike is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Global Gold and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Gold are associated (or correlated) with Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of GAMCO Global i.e., GAMCO Global and Nike go up and down completely randomly.

Pair Corralation between GAMCO Global and Nike

Assuming the 90 days trading horizon GAMCO Global Gold is expected to generate 0.8 times more return on investment than Nike. However, GAMCO Global Gold is 1.25 times less risky than Nike. It trades about 0.01 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest  2,026  in GAMCO Global Gold on September 17, 2024 and sell it today you would earn a total of  108.00  from holding GAMCO Global Gold or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.76%
Values	Daily Returns

GAMCO Global Gold  vs.  Nike Inc

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Nike is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GAMCO Global and Nike

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

The idea behind GAMCO Global Gold and Nike Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .