Correlation Between Associated Capital and GCM Grosvenor

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

By analyzing existing cross correlation between Associated Capital Group and GCM Grosvenor, you can compare the effects of market volatilities on Associated Capital 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 Associated Capital with a short position of GCM Grosvenor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and GCM Grosvenor.

Diversification Opportunities for Associated Capital and GCM Grosvenor

0.82

Correlation Coefficient

Associated Capital  GCM Grosvenor

Very poor diversification

The 3 months correlation between Associated and GCM is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Associated Capital 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 Associated Capital Group 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 Associated Capital i.e., Associated Capital and GCM Grosvenor go up and down completely randomly.

Pair Corralation between Associated Capital and GCM Grosvenor

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 8.05 times less return on investment than GCM Grosvenor. But when comparing it to its historical volatility, Associated Capital Group is 5.17 times less risky than GCM Grosvenor. It trades about 0.08 of its potential returns per unit of risk. GCM Grosvenor is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  126.00  in GCM Grosvenor on December 28, 2024 and sell it today you would earn a total of  74.00  from holding GCM Grosvenor or generate 58.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Associated Capital Group  vs.  GCM Grosvenor

Associated Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Associated Capital and GCM Grosvenor

The main advantage of trading using opposite Associated Capital and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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.

The idea behind Associated Capital Group and GCM Grosvenor 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.