Correlation Between Sea and Griffon
Can any of the company-specific risk be diversified away by investing in both Sea 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 Sea and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Griffon, you can compare the effects of market volatilities on Sea 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 Sea with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Griffon.
Diversification Opportunities for Sea and Griffon
Poor diversification
The 3 months correlation between Sea and Griffon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Sea 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 Sea 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 Sea i.e., Sea and Griffon go up and down completely randomly.
Pair Corralation between Sea and Griffon
Allowing for the 90-day total investment horizon Sea is expected to generate 0.79 times more return on investment than Griffon. However, Sea is 1.27 times less risky than Griffon. It trades about 0.26 of its potential returns per unit of risk. Griffon is currently generating about 0.16 per unit of risk. If you would invest 7,815 in Sea on September 4, 2024 and sell it today you would earn a total of 3,509 from holding Sea or generate 44.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. Griffon
Performance |
| Timeline |
| Sea |
| Griffon |
Sea and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Griffon
The main advantage of trading using opposite Sea and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea 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.| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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