Correlation Between GAMCO Global and SEMPRA

Can any of the company-specific risk be diversified away by investing in both GAMCO Global and SEMPRA 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 SEMPRA 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 SEMPRA ENERGY 6, you can compare the effects of market volatilities on GAMCO Global and SEMPRA 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 SEMPRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Global and SEMPRA.

Diversification Opportunities for GAMCO Global and SEMPRA

0.52

Correlation Coefficient

GAMCO Global  SEMPRA

Very weak diversification

The 3 months correlation between GAMCO and SEMPRA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Global Gold and SEMPRA ENERGY 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEMPRA ENERGY 6 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 SEMPRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEMPRA ENERGY 6 has no effect on the direction of GAMCO Global i.e., GAMCO Global and SEMPRA go up and down completely randomly.

Pair Corralation between GAMCO Global and SEMPRA

Assuming the 90 days trading horizon GAMCO Global is expected to generate 1.96 times less return on investment than SEMPRA. In addition to that, GAMCO Global is 1.12 times more volatile than SEMPRA ENERGY 6. It trades about 0.01 of its total potential returns per unit of risk. SEMPRA ENERGY 6 is currently generating about 0.01 per unit of volatility. If you would invest  10,555  in SEMPRA ENERGY 6 on August 31, 2024 and sell it today you would earn a total of  53.00  from holding SEMPRA ENERGY 6 or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

GAMCO Global Gold  vs.  SEMPRA ENERGY 6

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 somewhat strong basic indicators, GAMCO Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SEMPRA ENERGY 6

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SEMPRA ENERGY 6 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SEMPRA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GAMCO Global and SEMPRA

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

The idea behind GAMCO Global Gold and SEMPRA ENERGY 6 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.