Correlation Between Griffon and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Griffon and Westport Fuel 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 Westport Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and Westport Fuel Systems, you can compare the effects of market volatilities on Griffon and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and Westport Fuel.
Diversification Opportunities for Griffon and Westport Fuel
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Griffon and Westport is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Griffon i.e., Griffon and Westport Fuel go up and down completely randomly.
Pair Corralation between Griffon and Westport Fuel
Considering the 90-day investment horizon Griffon is expected to generate 0.65 times more return on investment than Westport Fuel. However, Griffon is 1.54 times less risky than Westport Fuel. It trades about 0.08 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about -0.03 per unit of risk. If you would invest 3,355 in Griffon on November 19, 2024 and sell it today you would earn a total of 4,381 from holding Griffon or generate 130.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Griffon vs. Westport Fuel Systems
Performance |
| Timeline |
| Griffon |
| Westport Fuel Systems |
Griffon and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Griffon and Westport Fuel
The main advantage of trading using opposite Griffon and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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