Correlation Between Federated Investors and GCM Grosvenor

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

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

Diversification Opportunities for Federated Investors and GCM Grosvenor

0.64

Correlation Coefficient

Federated Investors  GCM Grosvenor

Poor diversification

The 3 months correlation between Federated and GCM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Federated Investors B and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Federated Investors 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 Federated Investors B 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 Federated Investors i.e., Federated Investors and GCM Grosvenor go up and down completely randomly.

Pair Corralation between Federated Investors and GCM Grosvenor

Considering the 90-day investment horizon Federated Investors is expected to generate 114.18 times less return on investment than GCM Grosvenor. But when comparing it to its historical volatility, Federated Investors B is 63.07 times less risky than GCM Grosvenor. It trades about 0.05 of its potential returns per unit of risk. GCM Grosvenor is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  72.00  in GCM Grosvenor on September 3, 2024 and sell it today you would earn a total of  68.00  from holding GCM Grosvenor or generate 94.44% return on investment over 90 days.

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

Federated Investors B  vs.  GCM Grosvenor

Federated Investors

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Investors B are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Federated Investors demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Federated Investors and GCM Grosvenor

The main advantage of trading using opposite Federated Investors and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Investors 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 Federated Investors B 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.