Correlation Between Griffon and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both Griffon and Carpenter Technology 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 Carpenter Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and Carpenter Technology, you can compare the effects of market volatilities on Griffon and Carpenter Technology 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 Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Carpenter Technology.
Diversification Opportunities for Griffon and Carpenter Technology
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Griffon and Carpenter is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology 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 Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of Griffon i.e., Griffon and Carpenter Technology go up and down completely randomly.
Pair Corralation between Griffon and Carpenter Technology
Considering the 90-day investment horizon Griffon is expected to generate 1.18 times more return on investment than Carpenter Technology. However, Griffon is 1.18 times more volatile than Carpenter Technology. It trades about 0.28 of its potential returns per unit of risk. Carpenter Technology is currently generating about 0.25 per unit of risk. If you would invest 6,438 in Griffon on August 24, 2024 and sell it today you would earn a total of 1,858 from holding Griffon or generate 28.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. Carpenter Technology
Performance |
| Timeline |
| Griffon |
| Carpenter Technology |
Griffon and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and Carpenter Technology
The main advantage of trading using opposite Griffon and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, Carpenter Technology 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 Carpenter Technology will offset losses from the drop in Carpenter Technology's long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| Carpenter Technology vs. Haynes International | Carpenter Technology vs. Worthington Industries | Carpenter Technology vs. Ryerson Holding Corp | Carpenter Technology vs. Mueller Industries |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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