Correlation Between ARISTOCRAT LEISURE and Griffon
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE and Griffon 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 ARISTOCRAT LEISURE and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Griffon, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and Griffon 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 ARISTOCRAT LEISURE with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Griffon.
Diversification Opportunities for ARISTOCRAT LEISURE and Griffon
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ARISTOCRAT and Griffon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE are associated (or correlated) with Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Griffon go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Griffon
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to under-perform the Griffon. But the stock apears to be less risky and, when comparing its historical volatility, ARISTOCRAT LEISURE is 1.31 times less risky than Griffon. The stock trades about -0.07 of its potential returns per unit of risk. The Griffon is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 6,800 in Griffon on October 29, 2024 and sell it today you would earn a total of 650.00 from holding Griffon or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Griffon
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Griffon |
ARISTOCRAT LEISURE and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Griffon
The main advantage of trading using opposite ARISTOCRAT LEISURE and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| ARISTOCRAT LEISURE vs. Urban Outfitters | ARISTOCRAT LEISURE vs. SWISS WATER DECAFFCOFFEE | ARISTOCRAT LEISURE vs. Spirent Communications plc | ARISTOCRAT LEISURE vs. URBAN OUTFITTERS |
| Griffon vs. FIREWEED METALS P | Griffon vs. Jacquet Metal Service | Griffon vs. HEALTHSTREAM | Griffon vs. EPSILON HEALTHCARE LTD |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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