Correlation Between Griffon and RMG Acquisition

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

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

Diversification Opportunities for Griffon and RMG Acquisition

0.0

Correlation Coefficient

Griffon  RMG Acquisition

Pay attention - limited upside

The 3 months correlation between Griffon and RMG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and RMG Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMG Acquisition 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 RMG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMG Acquisition Corp has no effect on the direction of Griffon i.e., Griffon and RMG Acquisition go up and down completely randomly.

Pair Corralation between Griffon and RMG Acquisition

If you would invest  6,307  in Griffon on October 8, 2024 and sell it today you would earn a total of  980.00  from holding Griffon or generate 15.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.8%
Values	Daily Returns

Griffon  vs.  RMG Acquisition Corp

Griffon

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 4 (%) 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.

RMG Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RMG Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, RMG Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Griffon and RMG Acquisition

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

The idea behind Griffon and RMG Acquisition 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.