Correlation Between Griffon and Avient Corp
Can any of the company-specific risk be diversified away by investing in both Griffon and Avient Corp 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 Avient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and Avient Corp, you can compare the effects of market volatilities on Griffon and Avient Corp 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 Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Avient Corp.
Diversification Opportunities for Griffon and Avient Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Griffon and Avient is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp 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 Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Griffon i.e., Griffon and Avient Corp go up and down completely randomly.
Pair Corralation between Griffon and Avient Corp
Considering the 90-day investment horizon Griffon is expected to generate 1.28 times more return on investment than Avient Corp. However, Griffon is 1.28 times more volatile than Avient Corp. It trades about 0.09 of its potential returns per unit of risk. Avient Corp is currently generating about 0.06 per unit of risk. If you would invest 3,236 in Griffon on August 27, 2024 and sell it today you would earn a total of 5,060 from holding Griffon or generate 156.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. Avient Corp
Performance |
| Timeline |
| Griffon |
| Avient Corp |
Griffon and Avient Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and Avient Corp
The main advantage of trading using opposite Griffon and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, Avient Corp 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 Avient Corp will offset losses from the drop in Avient Corp's long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| Avient Corp vs. Axalta Coating Systems | Avient Corp vs. H B Fuller | Avient Corp vs. Quaker Chemical | Avient Corp vs. Cabot |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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