Correlation Between GCM Grosvenor and Bayview Acquisition
Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Bayview Acquisition 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 Bayview Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCM Grosvenor and Bayview Acquisition Corp, you can compare the effects of market volatilities on GCM Grosvenor and Bayview Acquisition 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 Bayview Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Bayview Acquisition.
Diversification Opportunities for GCM Grosvenor and Bayview Acquisition
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GCM and Bayview is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Bayview Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayview Acquisition 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 Bayview Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayview Acquisition Corp has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Bayview Acquisition go up and down completely randomly.
Pair Corralation between GCM Grosvenor and Bayview Acquisition
Assuming the 90 days horizon GCM Grosvenor is expected to generate 475.56 times more return on investment than Bayview Acquisition. However, GCM Grosvenor is 475.56 times more volatile than Bayview Acquisition Corp. It trades about 0.08 of its potential returns per unit of risk. Bayview Acquisition Corp is currently generating about 0.14 per unit of risk. If you would invest 73.00 in GCM Grosvenor on August 29, 2024 and sell it today you would earn a total of 53.00 from holding GCM Grosvenor or generate 72.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 55.96% |
| Values | Daily Returns |
GCM Grosvenor vs. Bayview Acquisition Corp
Performance |
| Timeline |
| GCM Grosvenor |
| Bayview Acquisition Corp |
GCM Grosvenor and Bayview Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GCM Grosvenor and Bayview Acquisition
The main advantage of trading using opposite GCM Grosvenor and Bayview Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCM Grosvenor position performs unexpectedly, Bayview Acquisition 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 Bayview Acquisition will offset losses from the drop in Bayview Acquisition's long position.The idea behind GCM Grosvenor and Bayview Acquisition 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.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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