Correlation Between Ready Capital and GCM Grosvenor

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

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

Diversification Opportunities for Ready Capital and GCM Grosvenor

-0.57

Correlation Coefficient

Ready Capital  GCM Grosvenor

Excellent diversification

The 3 months correlation between Ready and GCM is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Ready Capital 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 Ready Capital Corp 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 Ready Capital i.e., Ready Capital and GCM Grosvenor go up and down completely randomly.

Pair Corralation between Ready Capital and GCM Grosvenor

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the GCM Grosvenor. But the stock apears to be less risky and, when comparing its historical volatility, Ready Capital Corp is 4.58 times less risky than GCM Grosvenor. The stock trades about -0.03 of its potential returns per unit of risk. The GCM Grosvenor is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  140.00  in GCM Grosvenor on November 29, 2024 and sell it today you would earn a total of  102.00  from holding GCM Grosvenor or generate 72.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Ready Capital Corp  vs.  GCM Grosvenor

Ready Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ready Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ready Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 fragile 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 Ready Capital and GCM Grosvenor

The main advantage of trading using opposite Ready Capital and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital 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 Ready Capital Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..