Correlation Between Western Asset and Gamco Natural

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Western Asset and Gamco Natural 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 Western Asset and Gamco Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Intermediate and Gamco Natural Resources, you can compare the effects of market volatilities on Western Asset and Gamco Natural 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 Western Asset with a short position of Gamco Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Gamco Natural.

Diversification Opportunities for Western Asset and Gamco Natural

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Western and Gamco is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Intermediate and Gamco Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Natural Resources and Western Asset 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 Western Asset Intermediate are associated (or correlated) with Gamco Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Natural Resources has no effect on the direction of Western Asset i.e., Western Asset and Gamco Natural go up and down completely randomly.

Pair Corralation between Western Asset and Gamco Natural

Assuming the 90 days horizon Western Asset Intermediate is expected to generate 0.29 times more return on investment than Gamco Natural. However, Western Asset Intermediate is 3.42 times less risky than Gamco Natural. It trades about -0.17 of its potential returns per unit of risk. Gamco Natural Resources is currently generating about -0.19 per unit of risk. If you would invest  983.00  in Western Asset Intermediate on September 29, 2024 and sell it today you would lose (25.00) from holding Western Asset Intermediate or give up 2.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Western Asset Intermediate  vs.  Gamco Natural Resources

 Performance 
       Timeline  
Western Asset Interm 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Western Asset Intermediate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Gamco Natural Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gamco Natural Resources 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.

Western Asset and Gamco Natural Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Western Asset and Gamco Natural

The main advantage of trading using opposite Western Asset and Gamco Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Gamco Natural 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 Gamco Natural will offset losses from the drop in Gamco Natural's long position.
The idea behind Western Asset Intermediate and Gamco Natural Resources 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.
Check out your portfolio center.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

Other Complementary Tools

Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets