Correlation Between Griffon and Mach Natural

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

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

Diversification Opportunities for Griffon and Mach Natural

-0.22

Correlation Coefficient

Griffon  Mach Natural

Very good diversification

The 3 months correlation between Griffon and Mach is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Mach Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach Natural Resources 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 Mach Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach Natural Resources has no effect on the direction of Griffon i.e., Griffon and Mach Natural go up and down completely randomly.

Pair Corralation between Griffon and Mach Natural

Considering the 90-day investment horizon Griffon is expected to under-perform the Mach Natural. In addition to that, Griffon is 1.21 times more volatile than Mach Natural Resources. It trades about -0.36 of its total potential returns per unit of risk. Mach Natural Resources is currently generating about 0.67 per unit of volatility. If you would invest  1,456  in Mach Natural Resources on October 7, 2024 and sell it today you would earn a total of  259.00  from holding Mach Natural Resources or generate 17.79% return on investment over 90 days.

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

Griffon  vs.  Mach Natural Resources

Griffon

Risk-Adjusted Performance

3 of 100

Insignificant

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 abnormal technical and fundamental indicators, Griffon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mach Natural Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mach Natural Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Mach Natural may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Griffon and Mach Natural

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

The idea behind Griffon and Mach Natural Resources 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 Global Correlations module to find global opportunities by holding instruments from different markets.