Correlation Between GCM Grosvenor and Colonial Coal
Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Colonial Coal 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 Colonial Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCM Grosvenor and Colonial Coal International, you can compare the effects of market volatilities on GCM Grosvenor and Colonial Coal 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 Colonial Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Colonial Coal.
Diversification Opportunities for GCM Grosvenor and Colonial Coal
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GCM and Colonial is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Colonial Coal International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colonial Coal Intern 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 Colonial Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colonial Coal Intern has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Colonial Coal go up and down completely randomly.
Pair Corralation between GCM Grosvenor and Colonial Coal
Assuming the 90 days horizon GCM Grosvenor is expected to generate 40.7 times more return on investment than Colonial Coal. However, GCM Grosvenor is 40.7 times more volatile than Colonial Coal International. It trades about 0.13 of its potential returns per unit of risk. Colonial Coal International is currently generating about -0.13 per unit of risk. If you would invest 66.00 in GCM Grosvenor on November 3, 2024 and sell it today you would earn a total of 136.00 from holding GCM Grosvenor or generate 206.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 89.6% |
| Values | Daily Returns |
GCM Grosvenor vs. Colonial Coal International
Performance |
| Timeline |
| GCM Grosvenor |
| Colonial Coal Intern |
GCM Grosvenor and Colonial Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GCM Grosvenor and Colonial Coal
The main advantage of trading using opposite GCM Grosvenor and Colonial Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCM Grosvenor position performs unexpectedly, Colonial Coal 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 Colonial Coal will offset losses from the drop in Colonial Coal's long position.| GCM Grosvenor vs. GCM Grosvenor | GCM Grosvenor vs. Glory Star New | GCM Grosvenor vs. Eos Energy Enterprises |
| Colonial Coal vs. Coronado Global Resources | Colonial Coal vs. Alpha Metallurgical Resources | Colonial Coal vs. Warrior Met Coal | Colonial Coal vs. Ramaco Resources |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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