Correlation Between Griffon and Bausch Lomb

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

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

Diversification Opportunities for Griffon and Bausch Lomb

0.25

Correlation Coefficient

Griffon  Bausch Lomb

Modest diversification

The 3 months correlation between Griffon and Bausch is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Bausch Lomb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Lomb Corp 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 Bausch Lomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Lomb Corp has no effect on the direction of Griffon i.e., Griffon and Bausch Lomb go up and down completely randomly.

Pair Corralation between Griffon and Bausch Lomb

Considering the 90-day investment horizon Griffon is expected to generate 1.11 times more return on investment than Bausch Lomb. However, Griffon is 1.11 times more volatile than Bausch Lomb Corp. It trades about 0.16 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.15 per unit of risk. If you would invest  6,196  in Griffon on September 9, 2024 and sell it today you would earn a total of  1,942  from holding Griffon or generate 31.34% return on investment over 90 days.

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

Griffon  vs.  Bausch Lomb Corp

Griffon

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon reported solid returns over the last few months and may actually be approaching a breakup point.

Bausch Lomb Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bausch Lomb Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Bausch Lomb displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Griffon and Bausch Lomb

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

The idea behind Griffon and Bausch Lomb Corp 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 Directory module to find actively traded commodities issued by global exchanges.