Correlation Between Mid Cap and Gamco International

Can any of the company-specific risk be diversified away by investing in both Mid Cap and Gamco International 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 Mid Cap and Gamco International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap Growth and Gamco International Growth, you can compare the effects of market volatilities on Mid Cap and Gamco International 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 Mid Cap with a short position of Gamco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Gamco International.

Diversification Opportunities for Mid Cap and Gamco International

0.5

Correlation Coefficient

Mid Cap  Gamco International

Very weak diversification

The 3 months correlation between Mid and Gamco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Gamco International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco International and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Gamco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco International has no effect on the direction of Mid Cap i.e., Mid Cap and Gamco International go up and down completely randomly.

Pair Corralation between Mid Cap and Gamco International

Assuming the 90 days horizon Mid Cap Growth is expected to under-perform the Gamco International. In addition to that, Mid Cap is 1.79 times more volatile than Gamco International Growth. It trades about -0.09 of its total potential returns per unit of risk. Gamco International Growth is currently generating about 0.0 per unit of volatility. If you would invest  1,898  in Gamco International Growth on January 24, 2025 and sell it today you would lose (12.00) from holding Gamco International Growth or give up 0.63% of portfolio value over 90 days.

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

Mid Cap Growth  vs.  Gamco International Growth

Mid Cap Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Gamco International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gamco International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Gamco International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid Cap and Gamco International

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

The idea behind Mid Cap Growth and Gamco International Growth 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.