Correlation Between Griffon and World Oil
Can any of the company-specific risk be diversified away by investing in both Griffon and World Oil 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 World Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and World Oil Group, you can compare the effects of market volatilities on Griffon and World Oil 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 World Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and World Oil.
Diversification Opportunities for Griffon and World Oil
Average diversification
The 3 months correlation between Griffon and World is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and World Oil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Oil Group 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 World Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Oil Group has no effect on the direction of Griffon i.e., Griffon and World Oil go up and down completely randomly.
Pair Corralation between Griffon and World Oil
Considering the 90-day investment horizon Griffon is expected to generate 0.43 times more return on investment than World Oil. However, Griffon is 2.33 times less risky than World Oil. It trades about 0.29 of its potential returns per unit of risk. World Oil Group is currently generating about 0.06 per unit of risk. If you would invest 6,422 in Griffon on August 29, 2024 and sell it today you would earn a total of 2,015 from holding Griffon or generate 31.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. World Oil Group
Performance |
| Timeline |
| Griffon |
| World Oil Group |
Griffon and World Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and World Oil
The main advantage of trading using opposite Griffon and World Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, World Oil 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 World Oil will offset losses from the drop in World Oil's long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| World Oil vs. Honeywell International | World Oil vs. 3M Company | World Oil vs. Mitsubishi Corp | World Oil vs. Hitachi |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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