Correlation Between Griffon and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Griffon and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Griffon and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Cumberland Pharmaceuticals.
Diversification Opportunities for Griffon and Cumberland Pharmaceuticals
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Griffon and Cumberland is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Griffon i.e., Griffon and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Griffon and Cumberland Pharmaceuticals
Considering the 90-day investment horizon Griffon is expected to generate 1.4 times more return on investment than Cumberland Pharmaceuticals. However, Griffon is 1.4 times more volatile than Cumberland Pharmaceuticals. It trades about 0.15 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.09 per unit of risk. If you would invest 6,933 in Griffon on August 28, 2024 and sell it today you would earn a total of 1,504 from holding Griffon or generate 21.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Griffon |
| Cumberland Pharmaceuticals |
Griffon and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and Cumberland Pharmaceuticals
The main advantage of trading using opposite Griffon and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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