Correlation Between GCM Grosvenor and Financial Strategies

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

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

Diversification Opportunities for GCM Grosvenor and Financial Strategies

0.62

Correlation Coefficient

GCM Grosvenor  Financial Strategies

Poor diversification

The 3 months correlation between GCM and Financial is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Financial Strategies Acquisiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Strategies 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 Financial Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Strategies has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Financial Strategies go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Financial Strategies

Assuming the 90 days horizon GCM Grosvenor is expected to generate 516.36 times more return on investment than Financial Strategies. However, GCM Grosvenor is 516.36 times more volatile than Financial Strategies Acquisition. It trades about 0.08 of its potential returns per unit of risk. Financial Strategies Acquisition is currently generating about 0.2 per unit of risk. If you would invest  67.00  in GCM Grosvenor on October 7, 2024 and sell it today you would earn a total of  73.00  from holding GCM Grosvenor or generate 108.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.63%
Values	Daily Returns

GCM Grosvenor  vs.  Financial Strategies Acquisiti

GCM Grosvenor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 9 (%) 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.

Financial Strategies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Financial Strategies Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Financial Strategies is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GCM Grosvenor and Financial Strategies

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

The idea behind GCM Grosvenor and Financial Strategies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.