Correlation Between PPG Industries and Griffon
Can any of the company-specific risk be diversified away by investing in both PPG Industries 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 PPG Industries and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Griffon, you can compare the effects of market volatilities on PPG Industries 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 PPG Industries with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Griffon.
Diversification Opportunities for PPG Industries and Griffon
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PPG and Griffon is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and PPG Industries 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 PPG Industries 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 PPG Industries i.e., PPG Industries and Griffon go up and down completely randomly.
Pair Corralation between PPG Industries and Griffon
Considering the 90-day investment horizon PPG Industries is expected to under-perform the Griffon. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 2.2 times less risky than Griffon. The stock trades about -0.02 of its potential returns per unit of risk. The Griffon is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,016 in Griffon on September 12, 2024 and sell it today you would earn a total of 3,991 from holding Griffon or generate 99.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. Griffon
Performance |
| Timeline |
| PPG Industries |
| Griffon |
PPG Industries and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Griffon
The main advantage of trading using opposite PPG Industries and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries 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.| PPG Industries vs. Griffon | PPG Industries vs. Merck Company | PPG Industries vs. Brinker International | PPG Industries vs. Alcoa Corp |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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