Correlation Between Invesco California and GCM Grosvenor

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

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

Diversification Opportunities for Invesco California and GCM Grosvenor

-0.48

Correlation Coefficient

Invesco California  GCM Grosvenor

Very good diversification

The 3 months correlation between Invesco and GCM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California Value and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Invesco California 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 Invesco California Value 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 Invesco California i.e., Invesco California and GCM Grosvenor go up and down completely randomly.

Pair Corralation between Invesco California and GCM Grosvenor

Considering the 90-day investment horizon Invesco California Value is expected to under-perform the GCM Grosvenor. But the stock apears to be less risky and, when comparing its historical volatility, Invesco California Value is 11.75 times less risky than GCM Grosvenor. The stock trades about -0.06 of its potential returns per unit of risk. The GCM Grosvenor is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  70.00  in GCM Grosvenor on September 13, 2024 and sell it today you would earn a total of  52.00  from holding GCM Grosvenor or generate 74.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Invesco California Value  vs.  GCM Grosvenor

Invesco California Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco California Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Invesco California is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 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 Invesco California and GCM Grosvenor

The main advantage of trading using opposite Invesco California and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco California 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 Invesco California Value 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.