Correlation Between GCM Grosvenor and Princeton Capital

Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Princeton Capital 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 GCM Grosvenor and Princeton Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GCM Grosvenor and Princeton Capital, you can compare the effects of market volatilities on GCM Grosvenor and Princeton Capital 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 GCM Grosvenor with a short position of Princeton Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Princeton Capital.

Diversification Opportunities for GCM Grosvenor and Princeton Capital

0.06

Correlation Coefficient

GCM Grosvenor  Princeton Capital

Significant diversification

The 3 months correlation between GCM and Princeton is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Capital and GCM Grosvenor 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 GCM Grosvenor are associated (or correlated) with Princeton Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Capital has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Princeton Capital go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Princeton Capital

Given the investment horizon of 90 days GCM Grosvenor is expected to generate 0.17 times more return on investment than Princeton Capital. However, GCM Grosvenor is 5.74 times less risky than Princeton Capital. It trades about -0.01 of its potential returns per unit of risk. Princeton Capital is currently generating about -0.22 per unit of risk. If you would invest  1,234  in GCM Grosvenor on September 27, 2024 and sell it today you would lose (5.00) from holding GCM Grosvenor or give up 0.41% of portfolio value over 90 days.

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

GCM Grosvenor  vs.  Princeton Capital

GCM Grosvenor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, GCM Grosvenor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Princeton Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Princeton Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Princeton Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Grosvenor and Princeton Capital

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

The idea behind GCM Grosvenor and Princeton 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.