Correlation Between GCM Grosvenor and American Creek
Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and American Creek 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 American Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCM Grosvenor and American Creek Resources, you can compare the effects of market volatilities on GCM Grosvenor and American Creek 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 American Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and American Creek.
Diversification Opportunities for GCM Grosvenor and American Creek
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GCM and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and American Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Creek Resources 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 American Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Creek Resources has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and American Creek go up and down completely randomly.
Pair Corralation between GCM Grosvenor and American Creek
Assuming the 90 days horizon GCM Grosvenor is expected to generate 11.52 times more return on investment than American Creek. However, GCM Grosvenor is 11.52 times more volatile than American Creek Resources. It trades about 0.09 of its potential returns per unit of risk. American Creek Resources is currently generating about 0.06 per unit of risk. If you would invest 30.00 in GCM Grosvenor on August 29, 2024 and sell it today you would earn a total of 96.00 from holding GCM Grosvenor or generate 320.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.83% |
| Values | Daily Returns |
GCM Grosvenor vs. American Creek Resources
Performance |
| Timeline |
| GCM Grosvenor |
| American Creek Resources |
GCM Grosvenor and American Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GCM Grosvenor and American Creek
The main advantage of trading using opposite GCM Grosvenor and American Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCM Grosvenor position performs unexpectedly, American Creek 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 Creek will offset losses from the drop in American Creek's long position.The idea behind GCM Grosvenor and American Creek Resources 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.| American Creek vs. Gold79 Mines | American Creek vs. Arctic Star Exploration | American Creek vs. American Clean Resources | American Creek vs. Arras Minerals Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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