Diversification Optimization™ For Hedge Fund Managers

Gravity offers a proprietary, absolute return, sub advisory overlay service to hedge funds to augment their performance through Diversification Weighting® which as featured in the Journal of Indexing, Legends of Indexing issue, as the number one performing allocation engine in the world.  The exhaustive research demonstrated our beating the benchmark by * 427 basis points, per annum, without increasing risk over an 18 year market cycle. * No guarantees of future performance

Gsphere utilizes artificial intelligence and a patented genetic algorithm to outperform all other weighting strategies. Our proprietary science is particularly well-suited to the absolute return space serving both accredited and institutional investors. Gsphere’s Optimization is not subject to the short comings of typical optimizers that leave the over-constrained solution nearly useless.

Gsphere systematically removes inefficient assets and optimally identifies and reallocates to highly efficient assets weighted on Optimal Diversification.

Gravity commercially accommodates soft dollars, pay for performance, or thin fee overlays.

Compatible Assets and Strategies

  • Long / Short
  • Long Only / Short Only
  • Long Bias / Short Bias
  • Global Macro
  • Event Driven
  • Arbitrage
  • Spread Trading
  • Managed Futures
  • Multi –Strategy
  • Sector Driven
  • Quant Trading
  • Most Optimizers struggle with combinations of asset classes
  • G-Sphere eloquently allows for the optimization of any asset combination
  • Diversification Optimization™ yields more relevance to the output of target allocation

The Diversification Impact for Active Management

  • Why does diversification work?

Diversification is the fallback for active managers, if you are right you collect Alpha, if you are wrong, correlations prevail and diversification preserves capital.

Risk Minimization vs. Diversification Optimization

  • Diversification measurement is a prerequisite for diversification management
  • Risk is not volatility. It is loss of capital. If your input is wrong, your output will be at least as wrong
  • Correlation is a more stable input than volatility, so your output will better converge to the portfolio as modeled
  • Portfolios often need volatile positions to attain desired permformance

Diversification in Spreads

  • Spreads tend to be less correlated with other spread positions
  • Managers get fooled by hidden correlations from position to position
  • Hidden correlations have common factors which if not anticipated can lead to underperformance or drawdowns
  • Optimizing for diversification better protects against hidden commonality

Working with Gravity

  • Engagements have a blend of consulting, intellectual property licensing, education, fully hosted cloud technologies
  • Integrations / customizations as necessary
  • Pilots / Parallel Tests / Research Projects / Best Practices