Correlation Between GCM Grosvenor and Landsea Homes

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

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

Diversification Opportunities for GCM Grosvenor and Landsea Homes

-0.3

Correlation Coefficient

GCM Grosvenor  Landsea Homes

Very good diversification

The 3 months correlation between GCM and Landsea is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Landsea Homes Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landsea Homes Corp 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 Landsea Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landsea Homes Corp has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Landsea Homes go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Landsea Homes

Given the investment horizon of 90 days GCM Grosvenor is expected to generate 0.46 times more return on investment than Landsea Homes. However, GCM Grosvenor is 2.19 times less risky than Landsea Homes. It trades about 0.16 of its potential returns per unit of risk. Landsea Homes Corp is currently generating about 0.01 per unit of risk. If you would invest  1,073  in GCM Grosvenor on September 4, 2024 and sell it today you would earn a total of  160.00  from holding GCM Grosvenor or generate 14.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

GCM Grosvenor  vs.  Landsea Homes Corp

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

Landsea Homes Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Landsea Homes Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Landsea Homes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GCM Grosvenor and Landsea Homes

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

The idea behind GCM Grosvenor and Landsea Homes Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..