Correlation Between Unum and Griffon
Can any of the company-specific risk be diversified away by investing in both Unum 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 Unum and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unum Group and Griffon, you can compare the effects of market volatilities on Unum 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 Unum with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unum and Griffon.
Diversification Opportunities for Unum and Griffon
Significant diversification
The 3 months correlation between Unum and Griffon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Unum Group and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Unum 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 Unum Group 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 Unum i.e., Unum and Griffon go up and down completely randomly.
Pair Corralation between Unum and Griffon
Given the investment horizon of 90 days Unum is expected to generate 26.44 times less return on investment than Griffon. But when comparing it to its historical volatility, Unum Group is 6.76 times less risky than Griffon. It trades about 0.08 of its potential returns per unit of risk. Griffon is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 6,339 in Griffon on September 5, 2024 and sell it today you would earn a total of 1,941 from holding Griffon or generate 30.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unum Group vs. Griffon
Performance |
| Timeline |
| Unum Group |
| Griffon |
Unum and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unum and Griffon
The main advantage of trading using opposite Unum and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unum 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.The idea behind Unum Group and Griffon pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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