Correlation Between Griffon and National Health
Can any of the company-specific risk be diversified away by investing in both Griffon and National Health 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 National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and National Health Scan, you can compare the effects of market volatilities on Griffon and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and National Health.
Diversification Opportunities for Griffon and National Health
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Griffon and National is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and National Health Scan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Scan 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Scan has no effect on the direction of Griffon i.e., Griffon and National Health go up and down completely randomly.
Pair Corralation between Griffon and National Health
Considering the 90-day investment horizon Griffon is expected to generate 2.72 times less return on investment than National Health. But when comparing it to its historical volatility, Griffon is 6.41 times less risky than National Health. It trades about 0.34 of its potential returns per unit of risk. National Health Scan is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1.80 in National Health Scan on September 1, 2024 and sell it today you would earn a total of 0.50 from holding National Health Scan or generate 27.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. National Health Scan
Performance |
| Timeline |
| Griffon |
| National Health Scan |
Griffon and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and National Health
The main advantage of trading using opposite Griffon and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| National Health vs. Emergent Health Corp | National Health vs. One World Universe | National Health vs. Nextmart | National Health vs. HeadsUp Entertainment International |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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