Correlation Between Summit Materials and Griffon
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Griffon, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Griffon.
Diversification Opportunities for Summit Materials and Griffon
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Summit and Griffon is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Griffon go up and down completely randomly.
Pair Corralation between Summit Materials and Griffon
Considering the 90-day investment horizon Summit Materials is expected to generate 0.69 times more return on investment than Griffon. However, Summit Materials is 1.45 times less risky than Griffon. It trades about 0.11 of its potential returns per unit of risk. Griffon is currently generating about 0.07 per unit of risk. If you would invest 3,880 in Summit Materials on August 24, 2024 and sell it today you would earn a total of 1,236 from holding Summit Materials or generate 31.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Griffon
Performance |
| Timeline |
| Summit Materials |
| Griffon |
Summit Materials and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Griffon
The main advantage of trading using opposite Summit Materials and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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