Correlation Between GCM Grosvenor and Toubani Resources

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

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

Diversification Opportunities for GCM Grosvenor and Toubani Resources

-0.85

Correlation Coefficient

GCM Grosvenor  Toubani Resources

Pay attention - limited upside

The 3 months correlation between GCM and Toubani is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Toubani Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toubani Resources 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 Toubani Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toubani Resources has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Toubani Resources go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Toubani Resources

Assuming the 90 days horizon GCM Grosvenor is expected to generate 2.46 times more return on investment than Toubani Resources. However, GCM Grosvenor is 2.46 times more volatile than Toubani Resources. It trades about 0.05 of its potential returns per unit of risk. Toubani Resources is currently generating about 0.04 per unit of risk. If you would invest  48.00  in GCM Grosvenor on February 16, 2024 and sell it today you would earn a total of  3.99  from holding GCM Grosvenor or generate 8.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	66.5%
Values	Daily Returns

GCM Grosvenor  vs.  Toubani Resources

GCM Grosvenor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Toubani Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toubani Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Toubani Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GCM Grosvenor and Toubani Resources

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

The idea behind GCM Grosvenor and Toubani Resources 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.