Correlation Between CF Acquisition and GCM Grosvenor
Can any of the company-specific risk be diversified away by investing in both CF Acquisition 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 CF Acquisition and GCM Grosvenor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Acquisition VII and GCM Grosvenor, you can compare the effects of market volatilities on CF Acquisition 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 CF Acquisition with a short position of GCM Grosvenor. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Acquisition and GCM Grosvenor.
Diversification Opportunities for CF Acquisition and GCM Grosvenor
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CFFS and GCM is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CF Acquisition VII and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and CF Acquisition 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 CF Acquisition VII 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 CF Acquisition i.e., CF Acquisition and GCM Grosvenor go up and down completely randomly.
Pair Corralation between CF Acquisition and GCM Grosvenor
Given the investment horizon of 90 days CF Acquisition is expected to generate 33.08 times less return on investment than GCM Grosvenor. But when comparing it to its historical volatility, CF Acquisition VII is 36.63 times less risky than GCM Grosvenor. It trades about 0.18 of its potential returns per unit of risk. GCM Grosvenor is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 100.00 in GCM Grosvenor on August 30, 2024 and sell it today you would earn a total of 26.00 from holding GCM Grosvenor or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Acquisition VII vs. GCM Grosvenor
Performance |
| Timeline |
| CF Acquisition VII |
| GCM Grosvenor |
CF Acquisition and GCM Grosvenor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Acquisition and GCM Grosvenor
The main advantage of trading using opposite CF Acquisition and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Acquisition 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 CF Acquisition VII 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.| GCM Grosvenor vs. ClimateRock Class A | GCM Grosvenor vs. CF Acquisition VII | GCM Grosvenor vs. DP Cap Acquisition |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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