Correlation Between GCM Grosvenor and Nuveen Municipalome

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

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

Diversification Opportunities for GCM Grosvenor and Nuveen Municipalome

-0.66

Correlation Coefficient

GCM Grosvenor  Nuveen Municipalome

Excellent diversification

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

Pair Corralation between GCM Grosvenor and Nuveen Municipalome

Assuming the 90 days horizon GCM Grosvenor is expected to generate 93.87 times more return on investment than Nuveen Municipalome. However, GCM Grosvenor is 93.87 times more volatile than Nuveen Municipalome. It trades about 0.08 of its potential returns per unit of risk. Nuveen Municipalome is currently generating about 0.03 per unit of risk. If you would invest  66.00  in GCM Grosvenor on September 5, 2024 and sell it today you would earn a total of  59.00  from holding GCM Grosvenor or generate 89.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	82.83%
Values	Daily Returns

GCM Grosvenor  vs.  Nuveen Municipalome

GCM Grosvenor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Nuveen Municipalome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Municipalome has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong primary indicators, Nuveen Municipalome is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GCM Grosvenor and Nuveen Municipalome

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

The idea behind GCM Grosvenor and Nuveen Municipalome 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.