Correlation Between GCM Grosvenor and MFS Investment

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

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

Diversification Opportunities for GCM Grosvenor and MFS Investment

0.15

Correlation Coefficient

GCM Grosvenor  MFS Investment

Average diversification

The 3 months correlation between GCM and MFS is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade 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 MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and MFS Investment go up and down completely randomly.

Pair Corralation between GCM Grosvenor and MFS Investment

Assuming the 90 days horizon GCM Grosvenor is expected to generate 120.21 times more return on investment than MFS Investment. However, GCM Grosvenor is 120.21 times more volatile than MFS Investment Grade. It trades about 0.08 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.06 per unit of risk. If you would invest  66.00  in GCM Grosvenor on September 5, 2024 and sell it today you would earn a total of  59.00  from holding GCM Grosvenor or generate 89.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.83%
Values	Daily Returns

GCM Grosvenor  vs.  MFS Investment Grade

GCM Grosvenor

Risk-Adjusted Performance

12 of 100

Good

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

MFS Investment Grade

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Investment Grade are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GCM Grosvenor and MFS Investment

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

The idea behind GCM Grosvenor and MFS Investment Grade 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.