Correlation Between GCM Grosvenor and Gold

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

By analyzing existing cross correlation between GCM Grosvenor and Gold And Gemstone, you can compare the effects of market volatilities on GCM Grosvenor and Gold 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 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Gold.

Diversification Opportunities for GCM Grosvenor and Gold

-0.68

Correlation Coefficient

GCM Grosvenor  Gold

Excellent diversification

The 3 months correlation between GCM and Gold is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Gold And Gemstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Gemstone 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 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Gemstone has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Gold go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Gold

Assuming the 90 days horizon GCM Grosvenor is expected to generate 1.04 times more return on investment than Gold. However, GCM Grosvenor is 1.04 times more volatile than Gold And Gemstone. It trades about 0.25 of its potential returns per unit of risk. Gold And Gemstone is currently generating about -0.12 per unit of risk. If you would invest  95.00  in GCM Grosvenor on September 2, 2024 and sell it today you would earn a total of  45.00  from holding GCM Grosvenor or generate 47.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

GCM Grosvenor  vs.  Gold And Gemstone

GCM Grosvenor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Gold And Gemstone

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold And Gemstone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GCM Grosvenor and Gold

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

The idea behind GCM Grosvenor and Gold And Gemstone 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.