Correlation Between Griffon and Ameriprise Financial

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

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

Diversification Opportunities for Griffon and Ameriprise Financial

0.73

Correlation Coefficient

Griffon  Ameriprise Financial

Poor diversification

The 3 months correlation between Griffon and Ameriprise is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Griffon 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 Griffon are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Griffon i.e., Griffon and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Griffon and Ameriprise Financial

Considering the 90-day investment horizon Griffon is expected to generate 1.21 times more return on investment than Ameriprise Financial. However, Griffon is 1.21 times more volatile than Ameriprise Financial. It trades about 0.02 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.05 per unit of risk. If you would invest  7,086  in Griffon on December 29, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Griffon  vs.  Ameriprise Financial

Griffon

Risk-Adjusted Performance

Very 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.

Ameriprise Financial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Griffon and Ameriprise Financial

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

The idea behind Griffon and Ameriprise Financial 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.