Correlation Between Guardian Capital and GCM Grosvenor

Can any of the company-specific risk be diversified away by investing in both Guardian 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 Guardian 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 Guardian Capital Group and GCM Grosvenor, you can compare the effects of market volatilities on Guardian 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 Guardian Capital with a short position of GCM Grosvenor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Capital and GCM Grosvenor.

Diversification Opportunities for Guardian Capital and GCM Grosvenor

0.38

Correlation Coefficient

Guardian Capital  GCM Grosvenor

Weak diversification

The 3 months correlation between Guardian and GCM is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Guardian 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 Guardian 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 Guardian 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 Guardian Capital i.e., Guardian Capital and GCM Grosvenor go up and down completely randomly.

Pair Corralation between Guardian Capital and GCM Grosvenor

Assuming the 90 days horizon Guardian Capital is expected to generate 2.44 times less return on investment than GCM Grosvenor. In addition to that, Guardian Capital is 1.49 times more volatile than GCM Grosvenor. It trades about 0.04 of its total potential returns per unit of risk. GCM Grosvenor is currently generating about 0.16 per unit of volatility. If you would invest  1,227  in GCM Grosvenor on December 5, 2024 and sell it today you would earn a total of  157.00  from holding GCM Grosvenor or generate 12.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.58%
Values	Daily Returns

Guardian Capital Group  vs.  GCM Grosvenor

Guardian Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guardian Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GCM Grosvenor

Risk-Adjusted Performance

OK

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. Despite nearly inconsistent primary indicators, GCM Grosvenor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardian Capital and GCM Grosvenor

The main advantage of trading using opposite Guardian Capital and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardian 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 Guardian 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.