Correlation Between Griffon and HNI Corp
Can any of the company-specific risk be diversified away by investing in both Griffon and HNI 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 HNI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and HNI Corp, you can compare the effects of market volatilities on Griffon and HNI 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 HNI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and HNI Corp.
Diversification Opportunities for Griffon and HNI Corp
Poor diversification
The 3 months correlation between Griffon and HNI is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI 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 HNI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corp has no effect on the direction of Griffon i.e., Griffon and HNI Corp go up and down completely randomly.
Pair Corralation between Griffon and HNI Corp
Considering the 90-day investment horizon Griffon is expected to generate 2.35 times more return on investment than HNI Corp. However, Griffon is 2.35 times more volatile than HNI Corp. It trades about 0.31 of its potential returns per unit of risk. HNI Corp is currently generating about 0.28 per unit of risk. If you would invest 6,436 in Griffon on August 28, 2024 and sell it today you would earn a total of 2,080 from holding Griffon or generate 32.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. HNI Corp
Performance |
| Timeline |
| Griffon |
| HNI Corp |
Griffon and HNI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and HNI Corp
The main advantage of trading using opposite Griffon and HNI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, HNI 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 HNI Corp will offset losses from the drop in HNI Corp's long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| HNI Corp vs. Park Electrochemical | HNI Corp vs. Innovative Solutions and | HNI Corp vs. Curtiss Wright | HNI Corp vs. National Presto 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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