Correlation Between Gamco Global and Salient Tactical

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

Diversification Opportunities for Gamco Global and Salient Tactical

-0.21

Correlation Coefficient

Gamco Global  Salient Tactical

Very good diversification

The 3 months correlation between Gamco and Salient is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Salient Tactical Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Tactical Plus 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 Salient Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Tactical Plus has no effect on the direction of Gamco Global i.e., Gamco Global and Salient Tactical go up and down completely randomly.

Pair Corralation between Gamco Global and Salient Tactical

Assuming the 90 days horizon Gamco Global is expected to generate 6.76 times less return on investment than Salient Tactical. In addition to that, Gamco Global is 1.61 times more volatile than Salient Tactical Plus. It trades about 0.01 of its total potential returns per unit of risk. Salient Tactical Plus is currently generating about 0.1 per unit of volatility. If you would invest  1,167  in Salient Tactical Plus on September 12, 2024 and sell it today you would earn a total of  31.00  from holding Salient Tactical Plus or generate 2.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Gamco Global Gold  vs.  Salient Tactical Plus

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 fund investors. 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.

Salient Tactical Plus

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salient Tactical Plus are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Salient Tactical 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 Salient Tactical

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

The idea behind Gamco Global Gold and Salient Tactical Plus 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.