Correlation Between Barloworld and GCM Grosvenor
Can any of the company-specific risk be diversified away by investing in both Barloworld and GCM Grosvenor 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 Barloworld and GCM Grosvenor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and GCM Grosvenor, you can compare the effects of market volatilities on Barloworld and GCM Grosvenor 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 Barloworld with a short position of GCM Grosvenor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and GCM Grosvenor.
Diversification Opportunities for Barloworld and GCM Grosvenor
0.32 | Correlation Coefficient |
Weak diversification
The 24 months correlation between Barloworld and GCM is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with GCM Grosvenor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCM Grosvenor has no effect on the direction of Barloworld i.e., Barloworld and GCM Grosvenor go up and down completely randomly.
Pair Corralation between Barloworld and GCM Grosvenor
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 0.97 times more return on investment than GCM Grosvenor. However, Barloworld Ltd ADR is 1.04 times less risky than GCM Grosvenor. It trades about 0.16 of its potential returns per unit of risk. GCM Grosvenor is currently generating about 0.08 per unit of risk. If you would invest 354.00 in Barloworld Ltd ADR on February 11, 2024 and sell it today you would earn a total of 71.00 from holding Barloworld Ltd ADR or generate 20.06% return on investment over 90 days.
Time Period | 24 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Barloworld Ltd ADR vs. GCM Grosvenor
Performance |
Timeline |
Barloworld ADR |
GCM Grosvenor |
Barloworld and GCM Grosvenor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barloworld and GCM Grosvenor
The main advantage of trading using opposite Barloworld and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, GCM Grosvenor 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 GCM Grosvenor will offset losses from the drop in GCM Grosvenor's long position.Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. U Haul Holding | Barloworld vs. U Haul Holding |
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Check out your portfolio center.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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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