Correlation Between BCB Bancorp and Griffon

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

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

Diversification Opportunities for BCB Bancorp and Griffon

0.67

Correlation Coefficient

BCB Bancorp  Griffon

Poor diversification

The 3 months correlation between BCB and Griffon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp i.e., BCB Bancorp and Griffon go up and down completely randomly.

Pair Corralation between BCB Bancorp and Griffon

Given the investment horizon of 90 days BCB Bancorp is expected to under-perform the Griffon. In addition to that, BCB Bancorp is 1.01 times more volatile than Griffon. It trades about -0.02 of its total potential returns per unit of risk. Griffon is currently generating about 0.07 per unit of volatility. If you would invest  3,658  in Griffon on October 5, 2024 and sell it today you would earn a total of  3,539  from holding Griffon or generate 96.75% return on investment over 90 days.

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

BCB Bancorp  vs.  Griffon

BCB Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCB Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, BCB Bancorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Griffon

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BCB Bancorp and Griffon

The main advantage of trading using opposite BCB Bancorp and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCB Bancorp 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 BCB Bancorp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.