Correlation Between GCM Grosvenor and KKR Co

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

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

Diversification Opportunities for GCM Grosvenor and KKR Co

-0.13

Correlation Coefficient

GCM Grosvenor  KKR Co

Good diversification

The 3 months correlation between GCM and KKR is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and KKR Co go up and down completely randomly.

Pair Corralation between GCM Grosvenor and KKR Co

Assuming the 90 days horizon GCM Grosvenor is expected to generate 3.45 times more return on investment than KKR Co. However, GCM Grosvenor is 3.45 times more volatile than KKR Co LP. It trades about 0.1 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.14 per unit of risk. If you would invest  122.00  in GCM Grosvenor on December 17, 2024 and sell it today you would earn a total of  41.00  from holding GCM Grosvenor or generate 33.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

GCM Grosvenor  vs.  KKR Co LP

GCM Grosvenor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 7 (%) 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.

KKR Co LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days KKR Co LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with GCM Grosvenor and KKR Co

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

The idea behind GCM Grosvenor and KKR Co LP 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.