Correlation Between Gamco International and Teton Westwood

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

By analyzing existing cross correlation between Gamco International Growth and Teton Westwood Mighty, you can compare the effects of market volatilities on Gamco International and Teton Westwood 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 International with a short position of Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco International and Teton Westwood.

Diversification Opportunities for Gamco International and Teton Westwood

-0.63

Correlation Coefficient

Gamco International  Teton Westwood

Excellent diversification

The 3 months correlation between Gamco and Teton is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gamco International Growth and Teton Westwood Mighty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Mighty and Gamco International 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 International Growth are associated (or correlated) with Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Mighty has no effect on the direction of Gamco International i.e., Gamco International and Teton Westwood go up and down completely randomly.

Pair Corralation between Gamco International and Teton Westwood

Assuming the 90 days horizon Gamco International Growth is expected to under-perform the Teton Westwood. But the mutual fund apears to be less risky and, when comparing its historical volatility, Gamco International Growth is 1.31 times less risky than Teton Westwood. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Teton Westwood Mighty is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,576  in Teton Westwood Mighty on September 14, 2024 and sell it today you would earn a total of  96.00  from holding Teton Westwood Mighty or generate 6.09% return on investment over 90 days.

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

Gamco International Growth  vs.  Teton Westwood Mighty

Gamco International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Teton Westwood Mighty

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teton Westwood Mighty are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Teton Westwood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gamco International and Teton Westwood

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

The idea behind Gamco International Growth and Teton Westwood Mighty 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.