Correlation Between Emera Maine and Griffon

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

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

Diversification Opportunities for Emera Maine and Griffon

0.34

Correlation Coefficient

Emera Maine  Griffon

Weak diversification

The 3 months correlation between Emera and Griffon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Emera Maine PFD and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Emera Maine 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 Emera Maine PFD 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 Emera Maine i.e., Emera Maine and Griffon go up and down completely randomly.

Pair Corralation between Emera Maine and Griffon

Assuming the 90 days horizon Emera Maine is expected to generate 216.63 times less return on investment than Griffon. But when comparing it to its historical volatility, Emera Maine PFD is 6.4 times less risky than Griffon. It trades about 0.0 of its potential returns per unit of risk. Griffon is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,556  in Griffon on September 28, 2024 and sell it today you would earn a total of  3,629  from holding Griffon or generate 102.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	25.4%
Values	Daily Returns

Emera Maine PFD  vs.  Griffon

Emera Maine PFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emera Maine PFD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Emera Maine is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Griffon

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 2 (%) 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 Emera Maine and Griffon

The main advantage of trading using opposite Emera Maine and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emera Maine 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 Emera Maine PFD 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.