Correlation Between Gamco Natural and Eaton Vance

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

Diversification Opportunities for Gamco Natural and Eaton Vance

-0.57

Correlation Coefficient

Gamco Natural  Eaton Vance

Excellent diversification

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

Pair Corralation between Gamco Natural and Eaton Vance

Assuming the 90 days horizon Gamco Natural Resources is expected to under-perform the Eaton Vance. In addition to that, Gamco Natural is 1.04 times more volatile than Eaton Vance Capital. It trades about -0.07 of its total potential returns per unit of risk. Eaton Vance Capital is currently generating about 0.17 per unit of volatility. If you would invest  252,140  in Eaton Vance Capital on September 17, 2024 and sell it today you would earn a total of  18,908  from holding Eaton Vance Capital or generate 7.5% return on investment over 90 days.

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

Gamco Natural Resources  vs.  Eaton Vance Capital

Gamco Natural Resources

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Gamco Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Capital

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Capital are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gamco Natural and Eaton Vance

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

The idea behind Gamco Natural Resources and Eaton Vance Capital 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.