Correlation Between GCM Grosvenor and NorthView Acquisition

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

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

Diversification Opportunities for GCM Grosvenor and NorthView Acquisition

-0.33

Correlation Coefficient

GCM Grosvenor  NorthView Acquisition

Very good diversification

The 3 months correlation between GCM and NorthView is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and NorthView Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthView Acquisition 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 NorthView Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthView Acquisition has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and NorthView Acquisition go up and down completely randomly.

Pair Corralation between GCM Grosvenor and NorthView Acquisition

Assuming the 90 days horizon GCM Grosvenor is expected to generate 17.06 times less return on investment than NorthView Acquisition. But when comparing it to its historical volatility, GCM Grosvenor is 3.15 times less risky than NorthView Acquisition. It trades about 0.05 of its potential returns per unit of risk. NorthView Acquisition is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3.22  in NorthView Acquisition on September 27, 2024 and sell it today you would earn a total of  3.31  from holding NorthView Acquisition or generate 102.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

GCM Grosvenor  vs.  NorthView Acquisition

GCM Grosvenor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

NorthView Acquisition

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NorthView Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, NorthView Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Grosvenor and NorthView Acquisition

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

The idea behind GCM Grosvenor and NorthView Acquisition 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.