Correlation Between GCM Grosvenor and Malacca Straits
Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Malacca Straits 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 Malacca Straits into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCM Grosvenor and Malacca Straits Acquisition, you can compare the effects of market volatilities on GCM Grosvenor and Malacca Straits 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 Malacca Straits. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Malacca Straits.
Diversification Opportunities for GCM Grosvenor and Malacca Straits
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GCM and Malacca is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Malacca Straits Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malacca Straits Acqu 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 Malacca Straits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malacca Straits Acqu has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Malacca Straits go up and down completely randomly.
Pair Corralation between GCM Grosvenor and Malacca Straits
Assuming the 90 days horizon GCM Grosvenor is expected to generate 1.89 times more return on investment than Malacca Straits. However, GCM Grosvenor is 1.89 times more volatile than Malacca Straits Acquisition. It trades about 0.08 of its potential returns per unit of risk. Malacca Straits Acquisition is currently generating about 0.07 per unit of risk. If you would invest 67.00 in GCM Grosvenor on September 7, 2024 and sell it today you would earn a total of 59.00 from holding GCM Grosvenor or generate 88.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 17.86% |
Values | Daily Returns |
GCM Grosvenor vs. Malacca Straits Acquisition
Performance |
Timeline |
GCM Grosvenor |
Malacca Straits Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GCM Grosvenor and Malacca Straits Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GCM Grosvenor and Malacca Straits
The main advantage of trading using opposite GCM Grosvenor and Malacca Straits positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCM Grosvenor position performs unexpectedly, Malacca Straits 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 Malacca Straits will offset losses from the drop in Malacca Straits' long position.GCM Grosvenor vs. Munivest Fund | GCM Grosvenor vs. Federated Investors B | GCM Grosvenor vs. Federated Premier Municipal | GCM Grosvenor vs. Blackrock Muniyield |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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