Correlation Between GCM Grosvenor and Imperial Metals

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Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Imperial Metals 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 Imperial Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCM Grosvenor and Imperial Metals, you can compare the effects of market volatilities on GCM Grosvenor and Imperial Metals 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 Imperial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Imperial Metals.

Diversification Opportunities for GCM Grosvenor and Imperial Metals

GCMImperialDiversified AwayGCMImperialDiversified Away100%
-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between GCM and Imperial is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals 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 Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Imperial Metals go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Imperial Metals

Assuming the 90 days horizon GCM Grosvenor is expected to generate 3.93 times more return on investment than Imperial Metals. However, GCM Grosvenor is 3.93 times more volatile than Imperial Metals. It trades about 0.11 of its potential returns per unit of risk. Imperial Metals is currently generating about -0.17 per unit of risk. If you would invest  89.00  in GCM Grosvenor on September 26, 2024 and sell it today you would earn a total of  38.00  from holding GCM Grosvenor or generate 42.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy93.65%
ValuesDaily Returns

GCM Grosvenor  vs.  Imperial Metals

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10010203040
JavaScript chart by amCharts 3.21.15GCMGW IPMLF
       Timeline  
GCM Grosvenor 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.40.60.811.21.4
Imperial Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Imperial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1.21.31.41.51.61.7

GCM Grosvenor and Imperial Metals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-27.83-20.84-13.85-6.870.07.3314.6521.9829.3 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15GCMGW IPMLF
       Returns  

Pair Trading with GCM Grosvenor and Imperial Metals

The main advantage of trading using opposite GCM Grosvenor and Imperial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCM Grosvenor position performs unexpectedly, Imperial Metals 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 Imperial Metals will offset losses from the drop in Imperial Metals' long position.
The idea behind GCM Grosvenor and Imperial Metals 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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