Correlation Between Griffon and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Griffon and PPG Industries 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 PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and PPG Industries, you can compare the effects of market volatilities on Griffon and PPG Industries 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 PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and PPG Industries.
Diversification Opportunities for Griffon and PPG Industries
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Griffon and PPG is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Griffon i.e., Griffon and PPG Industries go up and down completely randomly.
Pair Corralation between Griffon and PPG Industries
Considering the 90-day investment horizon Griffon is expected to generate 3.56 times more return on investment than PPG Industries. However, Griffon is 3.56 times more volatile than PPG Industries. It trades about 0.16 of its potential returns per unit of risk. PPG Industries is currently generating about -0.03 per unit of risk. If you would invest 6,980 in Griffon on September 12, 2024 and sell it today you would earn a total of 1,027 from holding Griffon or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. PPG Industries
Performance |
| Timeline |
| Griffon |
| PPG Industries |
Griffon and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and PPG Industries
The main advantage of trading using opposite Griffon and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| PPG Industries vs. Griffon | PPG Industries vs. Merck Company | PPG Industries vs. Brinker International | PPG Industries vs. Alcoa Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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