Correlation Between Bny Mellon and GCM Grosvenor

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

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

Diversification Opportunities for Bny Mellon and GCM Grosvenor

-0.07

Correlation Coefficient

Bny Mellon  GCM Grosvenor

Good diversification

The 3 months correlation between Bny and GCM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Municipalome and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Bny Mellon 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 Bny Mellon Municipalome 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 Bny Mellon i.e., Bny Mellon and GCM Grosvenor go up and down completely randomly.

Pair Corralation between Bny Mellon and GCM Grosvenor

Considering the 90-day investment horizon Bny Mellon Municipalome is expected to under-perform the GCM Grosvenor. But the stock apears to be less risky and, when comparing its historical volatility, Bny Mellon Municipalome is 11.33 times less risky than GCM Grosvenor. The stock trades about -0.08 of its potential returns per unit of risk. The GCM Grosvenor is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  114.00  in GCM Grosvenor on December 2, 2024 and sell it today you would earn a total of  144.00  from holding GCM Grosvenor or generate 126.32% return on investment over 90 days.

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

Bny Mellon Municipalome  vs.  GCM Grosvenor

Bny Mellon Municipalome

Risk-Adjusted Performance

Very Weak

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

GCM Grosvenor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 16 (%) 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 Bny Mellon and GCM Grosvenor

The main advantage of trading using opposite Bny Mellon and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bny Mellon 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 Bny Mellon Municipalome 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.