Correlation Between GCM Grosvenor and CBH

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

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

Diversification Opportunities for GCM Grosvenor and CBH

0.87

Correlation Coefficient

GCM Grosvenor  CBH

Very poor diversification

The 3 months correlation between GCM and CBH is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and GCM Grosvenor 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 GCM Grosvenor are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and CBH go up and down completely randomly.

Pair Corralation between GCM Grosvenor and CBH

Given the investment horizon of 90 days GCM Grosvenor is expected to generate 2.77 times more return on investment than CBH. However, GCM Grosvenor is 2.77 times more volatile than CBH. It trades about 0.11 of its potential returns per unit of risk. CBH is currently generating about 0.08 per unit of risk. If you would invest  710.00  in GCM Grosvenor on August 31, 2024 and sell it today you would earn a total of  529.00  from holding GCM Grosvenor or generate 74.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	84.26%
Values	Daily Returns

GCM Grosvenor  vs.  CBH

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. Despite nearly inconsistent primary indicators, GCM Grosvenor reported solid returns over the last few months and may actually be approaching a breakup point.

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GCM Grosvenor and CBH

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

The idea behind GCM Grosvenor and CBH 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.