Correlation Between WM Technology and GCM Grosvenor

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

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

Diversification Opportunities for WM Technology and GCM Grosvenor

0.45

Correlation Coefficient

WM Technology  GCM Grosvenor

Very weak diversification

The 3 months correlation between MAPSW and GCM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and WM Technology 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 WM Technology 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 WM Technology i.e., WM Technology and GCM Grosvenor go up and down completely randomly.

Pair Corralation between WM Technology and GCM Grosvenor

Assuming the 90 days horizon WM Technology is expected to generate 2.09 times less return on investment than GCM Grosvenor. In addition to that, WM Technology is 1.34 times more volatile than GCM Grosvenor. It trades about 0.05 of its total potential returns per unit of risk. GCM Grosvenor is currently generating about 0.15 per unit of volatility. If you would invest  119.00  in GCM Grosvenor on December 27, 2024 and sell it today you would earn a total of  95.00  from holding GCM Grosvenor or generate 79.83% return on investment over 90 days.

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

WM Technology  vs.  GCM Grosvenor

WM Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WM Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, WM Technology showed solid returns over the last few months and may actually be approaching a breakup point.

GCM Grosvenor

Risk-Adjusted Performance

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.

Pair Trading with WM Technology and GCM Grosvenor

The main advantage of trading using opposite WM Technology and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WM Technology 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 WM Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.