Correlation Between National Health and Griffon
Can any of the company-specific risk be diversified away by investing in both National Health 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 National Health and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Scan and Griffon, you can compare the effects of market volatilities on National Health 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 National Health with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Griffon.
Diversification Opportunities for National Health and Griffon
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Griffon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding National Health Scan and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and National Health 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 National Health Scan 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 National Health i.e., National Health and Griffon go up and down completely randomly.
Pair Corralation between National Health and Griffon
Given the investment horizon of 90 days National Health Scan is expected to generate 10.39 times more return on investment than Griffon. However, National Health is 10.39 times more volatile than Griffon. It trades about 0.03 of its potential returns per unit of risk. Griffon is currently generating about -0.13 per unit of risk. If you would invest 2.30 in National Health Scan on November 27, 2024 and sell it today you would lose (1.10) from holding National Health Scan or give up 47.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Scan vs. Griffon
Performance |
| Timeline |
| National Health Scan |
| Griffon |
National Health and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Griffon
The main advantage of trading using opposite National Health and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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.| National Health vs. Emergent Health Corp | National Health vs. One World Universe | National Health vs. Nextmart | National Health vs. HeadsUp Entertainment International |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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