Correlation Between Western Union and Griffon
Can any of the company-specific risk be diversified away by investing in both Western Union 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 Western Union and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Union Co and Griffon, you can compare the effects of market volatilities on Western Union 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 Western Union with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Griffon.
Diversification Opportunities for Western Union and Griffon
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Griffon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Western Union 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 Western Union Co 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 Western Union i.e., Western Union and Griffon go up and down completely randomly.
Pair Corralation between Western Union and Griffon
Allowing for the 90-day total investment horizon Western Union is expected to generate 6.42 times less return on investment than Griffon. But when comparing it to its historical volatility, Western Union Co is 4.13 times less risky than Griffon. It trades about 0.1 of its potential returns per unit of risk. Griffon is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,980 in Griffon on September 12, 2024 and sell it today you would earn a total of 1,027 from holding Griffon or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. Griffon
Performance |
| Timeline |
| Western Union |
| Griffon |
Western Union and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Griffon
The main advantage of trading using opposite Western Union and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union 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.| Western Union vs. American Express | Western Union vs. Capital One Financial | Western Union vs. Upstart Holdings | Western Union vs. Ally Financial |
| 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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