Correlation Between Simpson Manufacturing and Griffon
Can any of the company-specific risk be diversified away by investing in both Simpson Manufacturing 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 Simpson Manufacturing and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simpson Manufacturing and Griffon, you can compare the effects of market volatilities on Simpson Manufacturing 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 Simpson Manufacturing with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simpson Manufacturing and Griffon.
Diversification Opportunities for Simpson Manufacturing and Griffon
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Simpson and Griffon is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Simpson Manufacturing and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Simpson Manufacturing 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 Simpson Manufacturing 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 Simpson Manufacturing i.e., Simpson Manufacturing and Griffon go up and down completely randomly.
Pair Corralation between Simpson Manufacturing and Griffon
Considering the 90-day investment horizon Simpson Manufacturing is expected to under-perform the Griffon. But the stock apears to be less risky and, when comparing its historical volatility, Simpson Manufacturing is 1.7 times less risky than Griffon. The stock trades about 0.0 of its potential returns per unit of risk. The Griffon is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,818 in Griffon on September 3, 2024 and sell it today you would earn a total of 1,612 from holding Griffon or generate 23.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simpson Manufacturing vs. Griffon
Performance |
| Timeline |
| Simpson Manufacturing |
| Griffon |
Simpson Manufacturing and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simpson Manufacturing and Griffon
The main advantage of trading using opposite Simpson Manufacturing and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simpson Manufacturing 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.| Simpson Manufacturing vs. West Fraser Timber | Simpson Manufacturing vs. Interfor | Simpson Manufacturing vs. Ufp Industries | Simpson Manufacturing vs. Canfor |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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