Correlation Between Gamco Natural and Blackrock Intern

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

Diversification Opportunities for Gamco Natural and Blackrock Intern

0.75

Correlation Coefficient

Gamco Natural  Blackrock Intern

Poor diversification

The 3 months correlation between Gamco and Blackrock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and Blackrock Intern Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Intern Index 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 Intern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Intern Index has no effect on the direction of Gamco Natural i.e., Gamco Natural and Blackrock Intern go up and down completely randomly.

Pair Corralation between Gamco Natural and Blackrock Intern

Assuming the 90 days horizon Gamco Natural Resources is expected to generate 0.76 times more return on investment than Blackrock Intern. However, Gamco Natural Resources is 1.32 times less risky than Blackrock Intern. It trades about -0.07 of its potential returns per unit of risk. Blackrock Intern Index is currently generating about -0.11 per unit of risk. If you would invest  650.00  in Gamco Natural Resources on September 16, 2024 and sell it today you would lose (20.00) from holding Gamco Natural Resources or give up 3.08% of portfolio value over 90 days.

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

Gamco Natural Resources  vs.  Blackrock Intern Index

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.

Blackrock Intern Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Intern Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Blackrock Intern 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 Natural and Blackrock Intern

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

The idea behind Gamco Natural Resources and Blackrock Intern Index 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.