Correlation Between GCM Grosvenor and Putnam Premier

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

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

Diversification Opportunities for GCM Grosvenor and Putnam Premier

-0.45

Correlation Coefficient

GCM Grosvenor  Putnam Premier

Very good diversification

The 3 months correlation between GCM and Putnam is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Putnam Premier Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Premier Income 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 Putnam Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Premier Income has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Putnam Premier go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Putnam Premier

Assuming the 90 days horizon GCM Grosvenor is expected to generate 14.68 times more return on investment than Putnam Premier. However, GCM Grosvenor is 14.68 times more volatile than Putnam Premier Income. It trades about 0.14 of its potential returns per unit of risk. Putnam Premier Income is currently generating about -0.07 per unit of risk. If you would invest  69.00  in GCM Grosvenor on September 4, 2024 and sell it today you would earn a total of  45.00  from holding GCM Grosvenor or generate 65.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

GCM Grosvenor  vs.  Putnam Premier Income

GCM Grosvenor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Putnam Premier Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Premier Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Putnam Premier is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GCM Grosvenor and Putnam Premier

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

The idea behind GCM Grosvenor and Putnam Premier Income 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.