Correlation Between GCM Grosvenor and Franklin Mining

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

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

Diversification Opportunities for GCM Grosvenor and Franklin Mining

0.08

Correlation Coefficient

GCM Grosvenor  Franklin Mining

Significant diversification

The 3 months correlation between GCM and Franklin is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Franklin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mining 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 Franklin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mining has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Franklin Mining go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Franklin Mining

Assuming the 90 days horizon GCM Grosvenor is expected to generate 2.62 times less return on investment than Franklin Mining. But when comparing it to its historical volatility, GCM Grosvenor is 3.08 times less risky than Franklin Mining. It trades about 0.14 of its potential returns per unit of risk. Franklin Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Franklin Mining on December 28, 2024 and sell it today you would earn a total of  0.02  from holding Franklin Mining or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GCM Grosvenor  vs.  Franklin Mining

GCM Grosvenor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Franklin Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Franklin Mining revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Grosvenor and Franklin Mining

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

The idea behind GCM Grosvenor and Franklin Mining 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.