Correlation Between GCM Grosvenor and Federated Premier

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

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

Diversification Opportunities for GCM Grosvenor and Federated Premier

0.81

Correlation Coefficient

GCM Grosvenor  Federated Premier

Very poor diversification

The 3 months correlation between GCM and Federated is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Federated Premier go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Federated Premier

Assuming the 90 days horizon GCM Grosvenor is expected to generate 15.52 times more return on investment than Federated Premier. However, GCM Grosvenor is 15.52 times more volatile than Federated Premier Municipal. It trades about 0.14 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.0 per unit of risk. If you would invest  126.00  in GCM Grosvenor on December 28, 2024 and sell it today you would earn a total of  84.00  from holding GCM Grosvenor or generate 66.67% return on investment over 90 days.

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

GCM Grosvenor  vs.  Federated Premier Municipal

GCM Grosvenor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Federated Premier

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GCM Grosvenor and Federated Premier

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

The idea behind GCM Grosvenor and Federated Premier Municipal 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.

Check out your portfolio center.

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.