Correlation Between Griffon and RELIANCE STEEL
Can any of the company-specific risk be diversified away by investing in both Griffon and RELIANCE STEEL 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 Griffon and RELIANCE STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and RELIANCE STEEL AL, you can compare the effects of market volatilities on Griffon and RELIANCE STEEL 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 Griffon with a short position of RELIANCE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and RELIANCE STEEL.
Diversification Opportunities for Griffon and RELIANCE STEEL
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Griffon and RELIANCE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and RELIANCE STEEL AL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELIANCE STEEL AL and Griffon 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 Griffon are associated (or correlated) with RELIANCE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELIANCE STEEL AL has no effect on the direction of Griffon i.e., Griffon and RELIANCE STEEL go up and down completely randomly.
Pair Corralation between Griffon and RELIANCE STEEL
Assuming the 90 days horizon Griffon is expected to generate 1.72 times more return on investment than RELIANCE STEEL. However, Griffon is 1.72 times more volatile than RELIANCE STEEL AL. It trades about 0.04 of its potential returns per unit of risk. RELIANCE STEEL AL is currently generating about -0.03 per unit of risk. If you would invest 6,204 in Griffon on October 14, 2024 and sell it today you would earn a total of 746.00 from holding Griffon or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. RELIANCE STEEL AL
Performance |
| Timeline |
| Griffon |
| RELIANCE STEEL AL |
Griffon and RELIANCE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and RELIANCE STEEL
The main advantage of trading using opposite Griffon and RELIANCE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, RELIANCE STEEL 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 RELIANCE STEEL will offset losses from the drop in RELIANCE STEEL's long position.| Griffon vs. SILICON LABORATOR | Griffon vs. Sunny Optical Technology | Griffon vs. INDO RAMA SYNTHETIC | Griffon vs. Easy Software AG |
| RELIANCE STEEL vs. PTT Global Chemical | RELIANCE STEEL vs. China BlueChemical | RELIANCE STEEL vs. Silicon Motion Technology | RELIANCE STEEL vs. Mitsubishi Gas Chemical |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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