Correlation Between Gamco Global and Baron Emerging

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

By analyzing existing cross correlation between Gamco Global Growth and Baron Emerging Markets, you can compare the effects of market volatilities on Gamco Global and Baron Emerging 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 Baron Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Baron Emerging.

Diversification Opportunities for Gamco Global and Baron Emerging

-0.64

Correlation Coefficient

Gamco Global  Baron Emerging

Excellent diversification

The 3 months correlation between Gamco and Baron is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Growth and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets 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 Growth are associated (or correlated) with Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of Gamco Global i.e., Gamco Global and Baron Emerging go up and down completely randomly.

Pair Corralation between Gamco Global and Baron Emerging

Assuming the 90 days horizon Gamco Global Growth is expected to generate 1.43 times more return on investment than Baron Emerging. However, Gamco Global is 1.43 times more volatile than Baron Emerging Markets. It trades about 0.09 of its potential returns per unit of risk. Baron Emerging Markets is currently generating about -0.05 per unit of risk. If you would invest  5,983  in Gamco Global Growth on September 28, 2024 and sell it today you would earn a total of  116.00  from holding Gamco Global Growth or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Gamco Global Growth  vs.  Baron Emerging Markets

Gamco Global Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco Global Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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.

Baron Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Gamco Global and Baron Emerging

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

The idea behind Gamco Global Growth and Baron Emerging Markets 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.