Correlation Between Gamco Natural and American Independence

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

Diversification Opportunities for Gamco Natural and American Independence

0.0

Correlation Coefficient

Gamco Natural  American Independence

Pay attention - limited upside

The 3 months correlation between Gamco and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Natural Resources and American Independence Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Independence 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 American Independence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Independence has no effect on the direction of Gamco Natural i.e., Gamco Natural and American Independence go up and down completely randomly.

Pair Corralation between Gamco Natural and American Independence

If you would invest (100.00) in American Independence Kansas on February 7, 2024 and sell it today you would earn a total of  100.00  from holding American Independence Kansas or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Gamco Natural Resources  vs.  American Independence Kansas

Gamco Natural Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco Natural Resources are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gamco Natural may actually be approaching a critical reversion point that can send shares even higher in June 2024.

American Independence

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Independence Kansas has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, American Independence 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 American Independence

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

The idea behind Gamco Natural Resources and American Independence Kansas 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.