Correlation Between COSTCO WHOLESALE and Griffon

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE 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 COSTCO WHOLESALE and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTCO WHOLESALE CDR and Griffon, you can compare the effects of market volatilities on COSTCO WHOLESALE 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 COSTCO WHOLESALE with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Griffon.

Diversification Opportunities for COSTCO WHOLESALE and Griffon

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between COSTCO and Griffon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Griffon go up and down completely randomly.

Pair Corralation between COSTCO WHOLESALE and Griffon

Assuming the 90 days trading horizon COSTCO WHOLESALE is expected to generate 1.24 times less return on investment than Griffon. But when comparing it to its historical volatility, COSTCO WHOLESALE CDR is 1.62 times less risky than Griffon. It trades about 0.1 of its potential returns per unit of risk. Griffon is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,240  in Griffon on October 16, 2024 and sell it today you would earn a total of  3,660  from holding Griffon or generate 112.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

COSTCO WHOLESALE CDR  vs.  Griffon

 Performance 
       Timeline  
COSTCO WHOLESALE CDR 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in COSTCO WHOLESALE CDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COSTCO WHOLESALE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Griffon 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Griffon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

COSTCO WHOLESALE and Griffon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with COSTCO WHOLESALE and Griffon

The main advantage of trading using opposite COSTCO WHOLESALE and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR 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.
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

Other Complementary Tools

Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device