Correlation Between Gamco Global and Short Precious

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

Diversification Opportunities for Gamco Global and Short Precious

-0.88

Correlation Coefficient

Gamco Global  Short Precious

Pay attention - limited upside

The 3 months correlation between Gamco and Short is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals 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 Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Gamco Global i.e., Gamco Global and Short Precious go up and down completely randomly.

Pair Corralation between Gamco Global and Short Precious

Assuming the 90 days horizon Gamco Global is expected to generate 1.32 times less return on investment than Short Precious. But when comparing it to its historical volatility, Gamco Global Gold is 2.6 times less risky than Short Precious. It trades about 0.03 of its potential returns per unit of risk. Short Precious Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  976.00  in Short Precious Metals on September 2, 2024 and sell it today you would earn a total of  7.00  from holding Short Precious Metals or generate 0.72% return on investment over 90 days.

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

Gamco Global Gold  vs.  Short Precious Metals

Gamco Global Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco Global Gold are ranked lower than 2 (%) 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.

Short Precious Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Short Precious Metals are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Precious 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 Short Precious

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

The idea behind Gamco Global Gold and Short Precious Metals 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.