Correlation Between Griffon and Bt Brands

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

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

Diversification Opportunities for Griffon and Bt Brands

-0.46

Correlation Coefficient

Griffon  Bt Brands

Very good diversification

The 3 months correlation between Griffon and BTBD is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Griffon i.e., Griffon and Bt Brands go up and down completely randomly.

Pair Corralation between Griffon and Bt Brands

Considering the 90-day investment horizon Griffon is expected to generate 0.46 times more return on investment than Bt Brands. However, Griffon is 2.17 times less risky than Bt Brands. It trades about 0.18 of its potential returns per unit of risk. Bt Brands is currently generating about 0.03 per unit of risk. If you would invest  7,388  in Griffon on September 18, 2024 and sell it today you would earn a total of  461.00  from holding Griffon or generate 6.24% return on investment over 90 days.

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

Griffon  vs.  Bt Brands

Griffon

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 7 (%) 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.

Bt Brands

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Bt Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Griffon and Bt Brands

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

The idea behind Griffon and Bt Brands 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.