Correlation Between GCM Grosvenor and Visa

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

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

Diversification Opportunities for GCM Grosvenor and Visa

0.9

Correlation Coefficient

GCM Grosvenor  Visa

Almost no diversification

The 3 months correlation between GCM and Visa is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Visa go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Visa

Given the investment horizon of 90 days GCM Grosvenor is expected to generate 1.17 times less return on investment than Visa. In addition to that, GCM Grosvenor is 1.32 times more volatile than Visa Class A. It trades about 0.27 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.41 per unit of volatility. If you would invest  31,387  in Visa Class A on December 2, 2024 and sell it today you would earn a total of  4,884  from holding Visa Class A or generate 15.56% return on investment over 90 days.

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

GCM Grosvenor  vs.  Visa Class A

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.

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Grosvenor and Visa

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

The idea behind GCM Grosvenor and Visa Class A 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.