Correlation Between Rocket Companies and GCM Grosvenor

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Can any of the company-specific risk be diversified away by investing in both Rocket Companies 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 Rocket Companies and GCM Grosvenor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Companies and GCM Grosvenor, you can compare the effects of market volatilities on Rocket Companies 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 Rocket Companies with a short position of GCM Grosvenor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and GCM Grosvenor.

Diversification Opportunities for Rocket Companies and GCM Grosvenor

RocketGCMDiversified AwayRocketGCMDiversified Away100%
0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Rocket and GCM is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor and Rocket Companies 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 Rocket Companies 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 Rocket Companies i.e., Rocket Companies and GCM Grosvenor go up and down completely randomly.

Pair Corralation between Rocket Companies and GCM Grosvenor

Considering the 90-day investment horizon Rocket Companies is expected to generate 6.21 times less return on investment than GCM Grosvenor. But when comparing it to its historical volatility, Rocket Companies is 2.41 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 0.15 of returns per unit of risk over similar time horizon. If you would invest  201.00  in GCM Grosvenor on November 27, 2024 and sell it today you would earn a total of  39.00  from holding GCM Grosvenor or generate 19.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Rocket Companies  vs.  GCM Grosvenor

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 050100150200
JavaScript chart by amCharts 3.21.15RKT GCMGW
       Timeline  
Rocket Companies 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Rocket Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb101112131415
GCM Grosvenor 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.522.53

Rocket Companies and GCM Grosvenor Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.4-3.3-2.19-1.09-0.01831.062.143.244.335.43 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15RKT GCMGW
       Returns  

Pair Trading with Rocket Companies and GCM Grosvenor

The main advantage of trading using opposite Rocket Companies and GCM Grosvenor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Companies 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 Rocket Companies 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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