Correlation Between Steel Partners and Griffon
Can any of the company-specific risk be diversified away by investing in both Steel Partners 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 Steel Partners and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Partners Holdings and Griffon, you can compare the effects of market volatilities on Steel Partners 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 Steel Partners with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Partners and Griffon.
Diversification Opportunities for Steel Partners and Griffon
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Steel and Griffon is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Steel Partners 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 Steel Partners 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 Steel Partners i.e., Steel Partners and Griffon go up and down completely randomly.
Pair Corralation between Steel Partners and Griffon
Given the investment horizon of 90 days Steel Partners is expected to generate 5.67 times less return on investment than Griffon. But when comparing it to its historical volatility, Steel Partners Holdings is 1.26 times less risky than Griffon. It trades about 0.02 of its potential returns per unit of risk. Griffon is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,785 in Griffon on August 27, 2024 and sell it today you would earn a total of 3,511 from holding Griffon or generate 73.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Partners Holdings vs. Griffon
Performance |
| Timeline |
| Steel Partners Holdings |
| Griffon |
Steel Partners and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Partners and Griffon
The main advantage of trading using opposite Steel Partners and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Partners 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.| Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch Co |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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