Correlation Between GCM Grosvenor and Bell Copper

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

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

Diversification Opportunities for GCM Grosvenor and Bell Copper

-0.43

Correlation Coefficient

GCM Grosvenor  Bell Copper

Very good diversification

The 3 months correlation between GCM and Bell is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Bell Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Copper 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 Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Bell Copper go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Bell Copper

Assuming the 90 days horizon GCM Grosvenor is expected to generate 0.54 times more return on investment than Bell Copper. However, GCM Grosvenor is 1.86 times less risky than Bell Copper. It trades about -0.01 of its potential returns per unit of risk. Bell Copper is currently generating about -0.02 per unit of risk. If you would invest  110.00  in GCM Grosvenor on September 22, 2024 and sell it today you would lose (10.00) from holding GCM Grosvenor or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GCM Grosvenor  vs.  Bell Copper

GCM Grosvenor

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 3 (%) 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.

Bell Copper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bell Copper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Bell Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Grosvenor and Bell Copper

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

The idea behind GCM Grosvenor and Bell Copper 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.