Correlation Between GCM Grosvenor and Interactive Brokers

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

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

Diversification Opportunities for GCM Grosvenor and Interactive Brokers

0.66

Correlation Coefficient

GCM Grosvenor  Interactive Brokers

Poor diversification

The 3 months correlation between GCM and Interactive is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers 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 Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Interactive Brokers go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Interactive Brokers

Assuming the 90 days horizon GCM Grosvenor is expected to generate 2.69 times more return on investment than Interactive Brokers. However, GCM Grosvenor is 2.69 times more volatile than Interactive Brokers Group. It trades about 0.13 of its potential returns per unit of risk. Interactive Brokers Group is currently generating about -0.02 per unit of risk. If you would invest  126.00  in GCM Grosvenor on December 29, 2024 and sell it today you would earn a total of  74.00  from holding GCM Grosvenor or generate 58.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

GCM Grosvenor  vs.  Interactive Brokers Group

GCM Grosvenor

Risk-Adjusted Performance

OK

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 weak technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Interactive Brokers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Interactive Brokers Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Interactive Brokers is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GCM Grosvenor and Interactive Brokers

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

The idea behind GCM Grosvenor and Interactive Brokers Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.