Correlation Between Park Ohio and Griffon
Can any of the company-specific risk be diversified away by investing in both Park Ohio 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 Park Ohio and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Griffon, you can compare the effects of market volatilities on Park Ohio 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 Park Ohio with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Griffon.
Diversification Opportunities for Park Ohio and Griffon
Poor diversification
The 3 months correlation between Park and Griffon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Park Ohio 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 Park Ohio Holdings 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 Park Ohio i.e., Park Ohio and Griffon go up and down completely randomly.
Pair Corralation between Park Ohio and Griffon
Given the investment horizon of 90 days Park Ohio is expected to generate 1.25 times less return on investment than Griffon. But when comparing it to its historical volatility, Park Ohio Holdings is 1.12 times less risky than Griffon. It trades about 0.07 of its potential returns per unit of risk. Griffon is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,787 in Griffon on August 28, 2024 and sell it today you would earn a total of 2,729 from holding Griffon or generate 47.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. Griffon
Performance |
| Timeline |
| Park Ohio Holdings |
| Griffon |
Park Ohio and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and Griffon
The main advantage of trading using opposite Park Ohio and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio 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.| Park Ohio vs. Aquagold International | Park Ohio vs. Morningstar Unconstrained Allocation | Park Ohio vs. High Yield Municipal Fund | Park Ohio vs. Thrivent High Yield |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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