Correlation Between GCM Grosvenor and Arko Corp

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

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

Diversification Opportunities for GCM Grosvenor and Arko Corp

0.55

Correlation Coefficient

GCM Grosvenor  Arko Corp

Very weak diversification

The 3 months correlation between GCM and Arko is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Arko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arko 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 Arko Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arko Corp has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Arko Corp go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Arko Corp

Assuming the 90 days horizon GCM Grosvenor is expected to generate 3.44 times more return on investment than Arko Corp. However, GCM Grosvenor is 3.44 times more volatile than Arko Corp. It trades about 0.11 of its potential returns per unit of risk. Arko Corp is currently generating about 0.08 per unit of risk. If you would invest  95.00  in GCM Grosvenor on September 17, 2024 and sell it today you would earn a total of  36.65  from holding GCM Grosvenor or generate 38.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

GCM Grosvenor  vs.  Arko Corp

GCM Grosvenor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Arko Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arko Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Arko Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GCM Grosvenor and Arko Corp

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

The idea behind GCM Grosvenor and Arko 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.