Correlation Between Carpenter Technology and Griffon
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology 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 Carpenter Technology and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carpenter Technology and Griffon, you can compare the effects of market volatilities on Carpenter Technology 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 Carpenter Technology with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Griffon.
Diversification Opportunities for Carpenter Technology and Griffon
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carpenter and Griffon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Carpenter Technology 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 Carpenter Technology 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 Carpenter Technology i.e., Carpenter Technology and Griffon go up and down completely randomly.
Pair Corralation between Carpenter Technology and Griffon
Considering the 90-day investment horizon Carpenter Technology is expected to generate 1.04 times less return on investment than Griffon. But when comparing it to its historical volatility, Carpenter Technology is 1.28 times less risky than Griffon. It trades about 0.08 of its potential returns per unit of risk. Griffon is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,783 in Griffon on November 7, 2024 and sell it today you would earn a total of 648.00 from holding Griffon or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carpenter Technology vs. Griffon
Performance |
| Timeline |
| Carpenter Technology |
| Griffon |
Carpenter Technology and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carpenter Technology and Griffon
The main advantage of trading using opposite Carpenter Technology and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology 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.| Carpenter Technology vs. Worthington Industries | Carpenter Technology vs. Ryerson Holding Corp | Carpenter Technology vs. Mueller Industries | Carpenter Technology vs. Allegheny Technologies Incorporated |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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