Correlation Between Griffon and RCM Technologies
Can any of the company-specific risk be diversified away by investing in both Griffon and RCM Technologies 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 RCM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and RCM Technologies, you can compare the effects of market volatilities on Griffon and RCM Technologies 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 RCM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and RCM Technologies.
Diversification Opportunities for Griffon and RCM Technologies
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Griffon and RCM is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies 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 RCM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM Technologies has no effect on the direction of Griffon i.e., Griffon and RCM Technologies go up and down completely randomly.
Pair Corralation between Griffon and RCM Technologies
Considering the 90-day investment horizon Griffon is expected to generate 1.47 times more return on investment than RCM Technologies. However, Griffon is 1.47 times more volatile than RCM Technologies. It trades about 0.25 of its potential returns per unit of risk. RCM Technologies is currently generating about 0.05 per unit of risk. If you would invest 6,438 in Griffon on August 24, 2024 and sell it today you would earn a total of 1,690 from holding Griffon or generate 26.25% 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. RCM Technologies
Performance |
| Timeline |
| Griffon |
| RCM Technologies |
Griffon and RCM Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and RCM Technologies
The main advantage of trading using opposite Griffon and RCM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, RCM Technologies 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 RCM Technologies will offset losses from the drop in RCM Technologies' long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| RCM Technologies vs. Steel Partners Holdings | RCM Technologies vs. FTAI Infrastructure | RCM Technologies vs. Griffon | RCM Technologies vs. Matthews 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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