Correlation Between Fortune Brands and Griffin Mining

Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Griffin Mining 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 Fortune Brands and Griffin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortune Brands Home and Griffin Mining, you can compare the effects of market volatilities on Fortune Brands and Griffin Mining 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 Fortune Brands with a short position of Griffin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Griffin Mining.

Diversification Opportunities for Fortune Brands and Griffin Mining

0.15

Correlation Coefficient

Fortune Brands  Griffin Mining

Average diversification

The 3 months correlation between Fortune and Griffin is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Griffin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffin Mining and Fortune Brands 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 Fortune Brands Home are associated (or correlated) with Griffin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffin Mining has no effect on the direction of Fortune Brands i.e., Fortune Brands and Griffin Mining go up and down completely randomly.

Pair Corralation between Fortune Brands and Griffin Mining

Assuming the 90 days trading horizon Fortune Brands is expected to generate 1.98 times less return on investment than Griffin Mining. In addition to that, Fortune Brands is 1.04 times more volatile than Griffin Mining. It trades about 0.03 of its total potential returns per unit of risk. Griffin Mining is currently generating about 0.05 per unit of volatility. If you would invest  9,100  in Griffin Mining on October 25, 2024 and sell it today you would earn a total of  5,200  from holding Griffin Mining or generate 57.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.87%
Values	Daily Returns

Fortune Brands Home  vs.  Griffin Mining

Fortune Brands Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortune Brands Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Griffin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Griffin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Griffin Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fortune Brands and Griffin Mining

The main advantage of trading using opposite Fortune Brands and Griffin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Griffin Mining 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 Griffin Mining will offset losses from the drop in Griffin Mining's long position.

The idea behind Fortune Brands Home and Griffin Mining 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.

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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.