Correlation Between GCM Grosvenor and Labrador Iron

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

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

Diversification Opportunities for GCM Grosvenor and Labrador Iron

-0.57

Correlation Coefficient

GCM Grosvenor  Labrador Iron

Excellent diversification

The 3 months correlation between GCM and Labrador is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore 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 Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Labrador Iron go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Labrador Iron

Assuming the 90 days horizon GCM Grosvenor is expected to generate 8.08 times more return on investment than Labrador Iron. However, GCM Grosvenor is 8.08 times more volatile than Labrador Iron Ore. It trades about 0.1 of its potential returns per unit of risk. Labrador Iron Ore is currently generating about -0.15 per unit of risk. If you would invest  126.00  in GCM Grosvenor on October 7, 2024 and sell it today you would earn a total of  14.00  from holding GCM Grosvenor or generate 11.11% return on investment over 90 days.

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

GCM Grosvenor  vs.  Labrador Iron Ore

GCM Grosvenor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 9 (%) 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.

Labrador Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GCM Grosvenor and Labrador Iron

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

The idea behind GCM Grosvenor and Labrador Iron Ore 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.