Correlation Between Blackrock Muniyield and GCM Grosvenor
Can any of the company-specific risk be diversified away by investing in both Blackrock Muniyield 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 Blackrock Muniyield and GCM Grosvenor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Muniyield and GCM Grosvenor, you can compare the effects of market volatilities on Blackrock Muniyield 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 Blackrock Muniyield with a short position of GCM Grosvenor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniyield and GCM Grosvenor.
Diversification Opportunities for Blackrock Muniyield and GCM Grosvenor
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Blackrock and GCM is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Blackrock Muniyield 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 Blackrock Muniyield 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 Blackrock Muniyield i.e., Blackrock Muniyield and GCM Grosvenor go up and down completely randomly.
Pair Corralation between Blackrock Muniyield and GCM Grosvenor
Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 186.7 times less return on investment than GCM Grosvenor. But when comparing it to its historical volatility, Blackrock Muniyield is 128.95 times less risky than GCM Grosvenor. It trades about 0.06 of its potential returns per unit of risk. GCM Grosvenor is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 73.00 in GCM Grosvenor on September 4, 2024 and sell it today you would earn a total of 41.00 from holding GCM Grosvenor or generate 56.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.83% |
| Values | Daily Returns |
Blackrock Muniyield vs. GCM Grosvenor
Performance |
| Timeline |
| Blackrock Muniyield |
| GCM Grosvenor |
Blackrock Muniyield and GCM Grosvenor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Muniyield and GCM Grosvenor
The main advantage of trading using opposite Blackrock Muniyield and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield 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 Blackrock Muniyield 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.
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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