Correlation Between GCM Grosvenor and Aurora Innovation
Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Aurora Innovation 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 Aurora Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCM Grosvenor and Aurora Innovation, you can compare the effects of market volatilities on GCM Grosvenor and Aurora Innovation 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 Aurora Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Aurora Innovation.
Diversification Opportunities for GCM Grosvenor and Aurora Innovation
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GCM and Aurora is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation 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 Aurora Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Innovation has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Aurora Innovation go up and down completely randomly.
Pair Corralation between GCM Grosvenor and Aurora Innovation
Assuming the 90 days horizon GCM Grosvenor is expected to generate 0.64 times more return on investment than Aurora Innovation. However, GCM Grosvenor is 1.57 times less risky than Aurora Innovation. It trades about 0.18 of its potential returns per unit of risk. Aurora Innovation is currently generating about 0.01 per unit of risk. If you would invest 100.00 in GCM Grosvenor on August 29, 2024 and sell it today you would earn a total of 29.00 from holding GCM Grosvenor or generate 29.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GCM Grosvenor vs. Aurora Innovation
Performance |
| Timeline |
| GCM Grosvenor |
| Aurora Innovation |
GCM Grosvenor and Aurora Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GCM Grosvenor and Aurora Innovation
The main advantage of trading using opposite GCM Grosvenor and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCM Grosvenor position performs unexpectedly, Aurora Innovation 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 Aurora Innovation will offset losses from the drop in Aurora Innovation's long position.| GCM Grosvenor vs. Aurora Innovation | GCM Grosvenor vs. HUMANA INC | GCM Grosvenor vs. Aquagold International | GCM Grosvenor vs. Barloworld Ltd ADR |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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