Correlation Between GCM Grosvenor and Orchid Island
Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Orchid Island 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 Orchid Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GCM Grosvenor and Orchid Island Capital, you can compare the effects of market volatilities on GCM Grosvenor and Orchid Island 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 Orchid Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Orchid Island.
Diversification Opportunities for GCM Grosvenor and Orchid Island
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GCM and Orchid is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Orchid Island Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchid Island Capital 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 Orchid Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchid Island Capital has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Orchid Island go up and down completely randomly.
Pair Corralation between GCM Grosvenor and Orchid Island
Assuming the 90 days horizon GCM Grosvenor is expected to generate 48.99 times more return on investment than Orchid Island. However, GCM Grosvenor is 48.99 times more volatile than Orchid Island Capital. It trades about 0.08 of its potential returns per unit of risk. Orchid Island Capital is currently generating about 0.01 per unit of risk. If you would invest 80.00 in GCM Grosvenor on August 23, 2024 and sell it today you would earn a total of 30.00 from holding GCM Grosvenor or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.86% |
| Values | Daily Returns |
GCM Grosvenor vs. Orchid Island Capital
Performance |
| Timeline |
| GCM Grosvenor |
| Orchid Island Capital |
GCM Grosvenor and Orchid Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GCM Grosvenor and Orchid Island
The main advantage of trading using opposite GCM Grosvenor and Orchid Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GCM Grosvenor position performs unexpectedly, Orchid Island 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 Orchid Island will offset losses from the drop in Orchid Island's long position.The idea behind GCM Grosvenor and Orchid Island Capital 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.| Orchid Island vs. AGNC Investment Corp | Orchid Island vs. Two Harbors Investments | Orchid Island vs. Invesco Mortgage Capital | Orchid Island vs. Chimera 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stocks Directory Find actively traded stocks across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |