Correlation Between GCM Grosvenor and Clearbridge Energy

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

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

Diversification Opportunities for GCM Grosvenor and Clearbridge Energy

0.72

Correlation Coefficient

GCM Grosvenor  Clearbridge Energy

Poor diversification

The 3 months correlation between GCM and Clearbridge is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp 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 Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Clearbridge Energy go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Clearbridge Energy

Given the investment horizon of 90 days GCM Grosvenor is expected to generate 1.02 times more return on investment than Clearbridge Energy. However, GCM Grosvenor is 1.02 times more volatile than Clearbridge Energy Mlp. It trades about 0.1 of its potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about -0.07 per unit of risk. If you would invest  1,353  in GCM Grosvenor on November 29, 2024 and sell it today you would earn a total of  37.00  from holding GCM Grosvenor or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GCM Grosvenor  vs.  Clearbridge Energy Mlp

GCM Grosvenor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 13 (%) 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.

Clearbridge Energy Mlp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearbridge Energy Mlp has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, Clearbridge Energy is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GCM Grosvenor and Clearbridge Energy

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

The idea behind GCM Grosvenor and Clearbridge Energy Mlp 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.