Correlation Between Griffon and BCB Bancorp

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

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

Diversification Opportunities for Griffon and BCB Bancorp

0.67

Correlation Coefficient

Griffon  BCB Bancorp

Poor diversification

The 3 months correlation between Griffon and BCB is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Griffon i.e., Griffon and BCB Bancorp go up and down completely randomly.

Pair Corralation between Griffon and BCB Bancorp

Considering the 90-day investment horizon Griffon is expected to under-perform the BCB Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Griffon is 1.51 times less risky than BCB Bancorp. The stock trades about -0.45 of its potential returns per unit of risk. The BCB Bancorp is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest  1,320  in BCB Bancorp on October 5, 2024 and sell it today you would lose (170.00) from holding BCB Bancorp or give up 12.88% of portfolio value over 90 days.

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

Griffon  vs.  BCB Bancorp

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.

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.

Pair Trading with Griffon and BCB Bancorp

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

The idea behind Griffon and BCB Bancorp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.