Correlation Between GCM Grosvenor and Regional Management

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

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

Diversification Opportunities for GCM Grosvenor and Regional Management

-0.36

Correlation Coefficient

GCM Grosvenor  Regional Management

Very good diversification

The 3 months correlation between GCM and Regional is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Regional Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Management 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 Regional Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Management Corp has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Regional Management go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Regional Management

Assuming the 90 days horizon GCM Grosvenor is expected to generate 3.48 times more return on investment than Regional Management. However, GCM Grosvenor is 3.48 times more volatile than Regional Management Corp. It trades about 0.12 of its potential returns per unit of risk. Regional Management Corp is currently generating about -0.01 per unit of risk. If you would invest  77.00  in GCM Grosvenor on September 3, 2024 and sell it today you would earn a total of  37.00  from holding GCM Grosvenor or generate 48.05% return on investment over 90 days.

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

GCM Grosvenor  vs.  Regional Management Corp

GCM Grosvenor

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Regional Management Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GCM Grosvenor and Regional Management

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

The idea behind GCM Grosvenor and Regional Management 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.