Correlation Between GCM Grosvenor and Bravada Gold

Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Bravada 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 Bravada 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 Bravada Gold, you can compare the effects of market volatilities on GCM Grosvenor and Bravada 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 Bravada Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Bravada Gold.

Diversification Opportunities for GCM Grosvenor and Bravada Gold

-0.49

Correlation Coefficient

GCM Grosvenor  Bravada Gold

Very good diversification

The 3 months correlation between GCM and Bravada is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold 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 Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Bravada Gold go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Bravada Gold

Assuming the 90 days horizon GCM Grosvenor is expected to generate 0.56 times more return on investment than Bravada Gold. However, GCM Grosvenor is 1.78 times less risky than Bravada Gold. It trades about 0.17 of its potential returns per unit of risk. Bravada Gold is currently generating about 0.01 per unit of risk. If you would invest  77.00  in GCM Grosvenor on September 3, 2024 and sell it today you would earn a total of  63.00  from holding GCM Grosvenor or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

GCM Grosvenor  vs.  Bravada Gold

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 unfluctuating technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Bravada Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bravada Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Grosvenor and Bravada Gold

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

The idea behind GCM Grosvenor and Bravada Gold 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.