Correlation Between Analog Devices and Griffon
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Griffon, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Griffon.
Diversification Opportunities for Analog Devices and Griffon
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Griffon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and Griffon go up and down completely randomly.
Pair Corralation between Analog Devices and Griffon
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Griffon. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 2.11 times less risky than Griffon. The stock trades about -0.05 of its potential returns per unit of risk. The Griffon is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 6,436 in Griffon on August 28, 2024 and sell it today you would earn a total of 2,080 from holding Griffon or generate 32.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Griffon
Performance |
| Timeline |
| Analog Devices |
| Griffon |
Analog Devices and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Griffon
The main advantage of trading using opposite Analog Devices and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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.The idea behind Analog Devices and Griffon 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.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
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.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |