Correlation Between Griffon and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Griffon and Morgan Stanley 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 Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and Morgan Stanley Direct, you can compare the effects of market volatilities on Griffon and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Morgan Stanley.
Diversification Opportunities for Griffon and Morgan Stanley
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Griffon and Morgan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Morgan Stanley Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Direct 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Direct has no effect on the direction of Griffon i.e., Griffon and Morgan Stanley go up and down completely randomly.
Pair Corralation between Griffon and Morgan Stanley
Considering the 90-day investment horizon Griffon is expected to generate 1.55 times more return on investment than Morgan Stanley. However, Griffon is 1.55 times more volatile than Morgan Stanley Direct. It trades about 0.08 of its potential returns per unit of risk. Morgan Stanley Direct is currently generating about 0.04 per unit of risk. If you would invest 3,354 in Griffon on September 17, 2024 and sell it today you would earn a total of 4,495 from holding Griffon or generate 134.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 45.77% |
| Values | Daily Returns |
Griffon vs. Morgan Stanley Direct
Performance |
| Timeline |
| Griffon |
| Morgan Stanley Direct |
Griffon and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and Morgan Stanley
The main advantage of trading using opposite Griffon and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings | Griffon vs. Steel Partners Holdings |
| Morgan Stanley vs. Griffon | Morgan Stanley vs. First Ship Lease | Morgan Stanley vs. HE Equipment Services | Morgan Stanley vs. Highway Holdings Limited |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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