Correlation Between GCM Grosvenor and Advantage Solutions

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

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

Diversification Opportunities for GCM Grosvenor and Advantage Solutions

0.21

Correlation Coefficient

GCM Grosvenor  Advantage Solutions

Modest diversification

The 3 months correlation between GCM and Advantage is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions 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 Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Advantage Solutions go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Advantage Solutions

Assuming the 90 days horizon GCM Grosvenor is expected to generate 5.81 times more return on investment than Advantage Solutions. However, GCM Grosvenor is 5.81 times more volatile than Advantage Solutions. It trades about 0.12 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.06 per unit of risk. If you would invest  41.00  in GCM Grosvenor on September 3, 2024 and sell it today you would earn a total of  99.00  from holding GCM Grosvenor or generate 241.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

GCM Grosvenor  vs.  Advantage Solutions

GCM Grosvenor

Risk-Adjusted Performance

13 of 100

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. In spite of fairly unfluctuating technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Advantage Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantage Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Grosvenor and Advantage Solutions

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

The idea behind GCM Grosvenor and Advantage Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.