Correlation Between State Street and GCM Grosvenor

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

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

Diversification Opportunities for State Street and GCM Grosvenor

0.26

Correlation Coefficient

State Street  GCM Grosvenor

Modest diversification

The 3 months correlation between State and GCM is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and State Street 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 State Street Corp are associated (or correlated) with GCM Grosvenor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCM Grosvenor has no effect on the direction of State Street i.e., State Street and GCM Grosvenor go up and down completely randomly.

Pair Corralation between State Street and GCM Grosvenor

Considering the 90-day investment horizon State Street is expected to generate 192.18 times less return on investment than GCM Grosvenor. But when comparing it to its historical volatility, State Street Corp is 6.78 times less risky than GCM Grosvenor. It trades about 0.0 of its potential returns per unit of risk. GCM Grosvenor is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  31.00  in GCM Grosvenor on March 14, 2024 and sell it today you would earn a total of  18.00  from holding GCM Grosvenor or generate 58.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

State Street Corp  vs.  GCM Grosvenor

State Street Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

GCM Grosvenor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with State Street and GCM Grosvenor

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

The idea behind State Street Corp and GCM Grosvenor 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.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.