Correlation Between GCM Grosvenor and Ares Acquisition

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

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

Diversification Opportunities for GCM Grosvenor and Ares Acquisition

0.77

Correlation Coefficient

GCM Grosvenor  Ares Acquisition

Poor diversification

The 3 months correlation between GCM and Ares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Ares Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Acquisition 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 Ares Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Acquisition has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Ares Acquisition go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Ares Acquisition

Assuming the 90 days horizon GCM Grosvenor is expected to generate 91.06 times more return on investment than Ares Acquisition. However, GCM Grosvenor is 91.06 times more volatile than Ares Acquisition. It trades about 0.13 of its potential returns per unit of risk. Ares Acquisition is currently generating about 0.24 per unit of risk. If you would invest  118.00  in GCM Grosvenor on October 21, 2024 and sell it today you would earn a total of  40.00  from holding GCM Grosvenor or generate 33.9% 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.  Ares Acquisition

GCM Grosvenor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Ares Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ares Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GCM Grosvenor and Ares Acquisition

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

The idea behind GCM Grosvenor and Ares Acquisition 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.