Correlation Between Griffon and Cabot
Can any of the company-specific risk be diversified away by investing in both Griffon and Cabot 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 Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and Cabot, you can compare the effects of market volatilities on Griffon and Cabot 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 Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Cabot.
Diversification Opportunities for Griffon and Cabot
Good diversification
The 3 months correlation between Griffon and Cabot is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot 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 Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Griffon i.e., Griffon and Cabot go up and down completely randomly.
Pair Corralation between Griffon and Cabot
Considering the 90-day investment horizon Griffon is expected to generate 2.64 times more return on investment than Cabot. However, Griffon is 2.64 times more volatile than Cabot. It trades about 0.17 of its potential returns per unit of risk. Cabot is currently generating about -0.19 per unit of risk. If you would invest 6,797 in Griffon on September 13, 2024 and sell it today you would earn a total of 1,107 from holding Griffon or generate 16.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. Cabot
Performance |
| Timeline |
| Griffon |
| Cabot |
Griffon and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and Cabot
The main advantage of trading using opposite Griffon and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| Cabot vs. Perimeter Solutions SA | Cabot vs. Kronos Worldwide | Cabot vs. Sensient Technologies | Cabot vs. Element Solutions |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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