Correlation Between GAMCO Natural and BlackRock Energy

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

By analyzing existing cross correlation between GAMCO Natural Resources and BlackRock Energy and, you can compare the effects of market volatilities on GAMCO Natural and BlackRock Energy 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 Natural with a short position of BlackRock Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Natural and BlackRock Energy.

Diversification Opportunities for GAMCO Natural and BlackRock Energy

-0.11

Correlation Coefficient

GAMCO Natural  BlackRock Energy

Good diversification

The 3 months correlation between GAMCO and BlackRock is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Natural Resources and BlackRock Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Energy and GAMCO Natural 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 Natural Resources are associated (or correlated) with BlackRock Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Energy has no effect on the direction of GAMCO Natural i.e., GAMCO Natural and BlackRock Energy go up and down completely randomly.

Pair Corralation between GAMCO Natural and BlackRock Energy

Considering the 90-day investment horizon GAMCO Natural is expected to generate 3.27 times less return on investment than BlackRock Energy. In addition to that, GAMCO Natural is 1.1 times more volatile than BlackRock Energy and. It trades about 0.03 of its total potential returns per unit of risk. BlackRock Energy and is currently generating about 0.12 per unit of volatility. If you would invest  1,239  in BlackRock Energy and on September 14, 2024 and sell it today you would earn a total of  90.00  from holding BlackRock Energy and or generate 7.26% return on investment over 90 days.

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

GAMCO Natural Resources  vs.  BlackRock Energy and

GAMCO Natural Resources

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GAMCO Natural Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GAMCO Natural is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BlackRock Energy

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish technical and fundamental indicators, BlackRock Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GAMCO Natural and BlackRock Energy

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

The idea behind GAMCO Natural Resources and BlackRock Energy and 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.