Correlation Between MDU Resources and Griffon
Can any of the company-specific risk be diversified away by investing in both MDU Resources and Griffon 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 MDU Resources and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MDU Resources Group and Griffon, you can compare the effects of market volatilities on MDU Resources and Griffon 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 MDU Resources with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of MDU Resources and Griffon.
Diversification Opportunities for MDU Resources and Griffon
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MDU and Griffon is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding MDU Resources Group and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and MDU Resources 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 MDU Resources Group are associated (or correlated) with Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of MDU Resources i.e., MDU Resources and Griffon go up and down completely randomly.
Pair Corralation between MDU Resources and Griffon
Considering the 90-day investment horizon MDU Resources is expected to generate 1.36 times less return on investment than Griffon. But when comparing it to its historical volatility, MDU Resources Group is 1.77 times less risky than Griffon. It trades about 0.41 of its potential returns per unit of risk. Griffon is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 6,436 in Griffon on August 28, 2024 and sell it today you would earn a total of 2,080 from holding Griffon or generate 32.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MDU Resources Group vs. Griffon
Performance |
| Timeline |
| MDU Resources Group |
| Griffon |
MDU Resources and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MDU Resources and Griffon
The main advantage of trading using opposite MDU Resources and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MDU Resources position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| MDU Resources vs. Griffon | MDU Resources vs. Brookfield Business Partners | MDU Resources vs. Matthews International | MDU Resources vs. Steel Partners Holdings |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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