Correlation Between Griffon and Sea
Can any of the company-specific risk be diversified away by investing in both Griffon and Sea 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 Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and Sea, you can compare the effects of market volatilities on Griffon and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Sea.
Diversification Opportunities for Griffon and Sea
Very poor diversification
The 3 months correlation between Griffon and Sea is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Griffon i.e., Griffon and Sea go up and down completely randomly.
Pair Corralation between Griffon and Sea
Considering the 90-day investment horizon Griffon is expected to generate 1.49 times more return on investment than Sea. However, Griffon is 1.49 times more volatile than Sea. It trades about 0.16 of its potential returns per unit of risk. Sea is currently generating about 0.23 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. Sea
Performance |
| Timeline |
| Griffon |
| Sea |
Griffon and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and Sea
The main advantage of trading using opposite Griffon and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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