Correlation Between Sprott Physical and GCM Grosvenor
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and GCM Grosvenor 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 Sprott Physical and GCM Grosvenor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Physical Gold and GCM Grosvenor, you can compare the effects of market volatilities on Sprott Physical and GCM Grosvenor 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 Sprott Physical with a short position of GCM Grosvenor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and GCM Grosvenor.
Diversification Opportunities for Sprott Physical and GCM Grosvenor
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprott and GCM is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Sprott Physical 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 Sprott Physical Gold are associated (or correlated) with GCM Grosvenor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCM Grosvenor has no effect on the direction of Sprott Physical i.e., Sprott Physical and GCM Grosvenor go up and down completely randomly.
Pair Corralation between Sprott Physical and GCM Grosvenor
Considering the 90-day investment horizon Sprott Physical is expected to generate 2.42 times less return on investment than GCM Grosvenor. But when comparing it to its historical volatility, Sprott Physical Gold is 1.18 times less risky than GCM Grosvenor. It trades about 0.05 of its potential returns per unit of risk. GCM Grosvenor is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 721.00 in GCM Grosvenor on August 29, 2024 and sell it today you would earn a total of 524.00 from holding GCM Grosvenor or generate 72.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Physical Gold vs. GCM Grosvenor
Performance |
| Timeline |
| Sprott Physical Gold |
| GCM Grosvenor |
Sprott Physical and GCM Grosvenor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and GCM Grosvenor
The main advantage of trading using opposite Sprott Physical and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, GCM Grosvenor 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 GCM Grosvenor will offset losses from the drop in GCM Grosvenor's long position.| Sprott Physical vs. Aquagold International | Sprott Physical vs. Morningstar Unconstrained Allocation | Sprott Physical vs. High Yield Municipal Fund | Sprott Physical vs. Thrivent High Yield |
| GCM Grosvenor vs. Aurora Innovation | GCM Grosvenor vs. HUMANA INC | GCM Grosvenor vs. Aquagold International | GCM Grosvenor vs. Barloworld Ltd ADR |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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