Correlation Between Air Transport and Griffon

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

By analyzing existing cross correlation between Air Transport Services and Griffon, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Griffon.

Diversification Opportunities for Air Transport and Griffon

0.02

Correlation Coefficient

Air Transport  Griffon

Significant diversification

The 3 months correlation between Air and Griffon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Griffon go up and down completely randomly.

Pair Corralation between Air Transport and Griffon

Given the investment horizon of 90 days Air Transport is expected to generate 1.33 times less return on investment than Griffon. But when comparing it to its historical volatility, Air Transport Services is 15.7 times less risky than Griffon. It trades about 0.26 of its potential returns per unit of risk. Griffon is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,086  in Griffon on December 28, 2024 and sell it today you would earn a total of  110.00  from holding Griffon or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Air Transport Services  vs.  Griffon

Air Transport Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Griffon

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Griffon is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air Transport and Griffon

The main advantage of trading using opposite Air Transport and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.