Correlation Between Westport Fuel and Griffon
Can any of the company-specific risk be diversified away by investing in both Westport Fuel 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 Westport Fuel and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westport Fuel Systems and Griffon, you can compare the effects of market volatilities on Westport Fuel 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 Westport Fuel with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Griffon.
Diversification Opportunities for Westport Fuel and Griffon
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westport and Griffon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Westport Fuel 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 Westport Fuel Systems 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 Westport Fuel i.e., Westport Fuel and Griffon go up and down completely randomly.
Pair Corralation between Westport Fuel and Griffon
Given the investment horizon of 90 days Westport Fuel is expected to generate 4.48 times less return on investment than Griffon. But when comparing it to its historical volatility, Westport Fuel Systems is 2.08 times less risky than Griffon. It trades about 0.14 of its potential returns per unit of risk. Griffon is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 6,325 in Griffon on August 30, 2024 and sell it today you would earn a total of 2,026 from holding Griffon or generate 32.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. Griffon
Performance |
| Timeline |
| Westport Fuel Systems |
| Griffon |
Westport Fuel and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and Griffon
The main advantage of trading using opposite Westport Fuel and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel 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.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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