Correlation Between Canoo Holdings and GCM Grosvenor

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

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

Diversification Opportunities for Canoo Holdings and GCM Grosvenor

-0.62

Correlation Coefficient

Canoo Holdings  GCM Grosvenor

Excellent diversification

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

Pair Corralation between Canoo Holdings and GCM Grosvenor

Assuming the 90 days horizon Canoo Holdings is expected to under-perform the GCM Grosvenor. In addition to that, Canoo Holdings is 1.19 times more volatile than GCM Grosvenor. It trades about -0.1 of its total potential returns per unit of risk. GCM Grosvenor is currently generating about 0.17 per unit of volatility. If you would invest  77.00  in GCM Grosvenor on September 3, 2024 and sell it today you would earn a total of  63.00  from holding GCM Grosvenor or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.19%
Values	Daily Returns

Canoo Holdings  vs.  GCM Grosvenor

Canoo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canoo Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

GCM Grosvenor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canoo Holdings and GCM Grosvenor

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

The idea behind Canoo Holdings and GCM Grosvenor 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.