Correlation Between GCM Grosvenor and Nickel Creek

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

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

Diversification Opportunities for GCM Grosvenor and Nickel Creek

-0.11

Correlation Coefficient

GCM Grosvenor  Nickel Creek

Good diversification

The 3 months correlation between GCM and Nickel is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum 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 Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Nickel Creek go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Nickel Creek

Assuming the 90 days horizon GCM Grosvenor is expected to generate 1.63 times more return on investment than Nickel Creek. However, GCM Grosvenor is 1.63 times more volatile than Nickel Creek Platinum. It trades about 0.14 of its potential returns per unit of risk. Nickel Creek Platinum is currently generating about -0.02 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  88.00  from holding GCM Grosvenor or generate 69.84% 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.  Nickel Creek Platinum

GCM Grosvenor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 11 (%) 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.

Nickel Creek Platinum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nickel Creek Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GCM Grosvenor and Nickel Creek

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

The idea behind GCM Grosvenor and Nickel Creek Platinum 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.