Correlation Between Griffon and RPM International
Can any of the company-specific risk be diversified away by investing in both Griffon and RPM International 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 RPM International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Griffon and RPM International, you can compare the effects of market volatilities on Griffon and RPM International 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 RPM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and RPM International.
Diversification Opportunities for Griffon and RPM International
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Griffon and RPM is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and RPM International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPM International 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 RPM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPM International has no effect on the direction of Griffon i.e., Griffon and RPM International go up and down completely randomly.
Pair Corralation between Griffon and RPM International
Considering the 90-day investment horizon Griffon is expected to under-perform the RPM International. In addition to that, Griffon is 1.58 times more volatile than RPM International. It trades about -0.1 of its total potential returns per unit of risk. RPM International is currently generating about -0.15 per unit of volatility. If you would invest 13,909 in RPM International on December 2, 2024 and sell it today you would lose (1,520) from holding RPM International or give up 10.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Griffon vs. RPM International
Performance |
Timeline |
Griffon |
RPM International |
Griffon and RPM International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Griffon and RPM International
The main advantage of trading using opposite Griffon and RPM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, RPM International 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 RPM International will offset losses from the drop in RPM International's long position.Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
RPM International vs. Innospec | RPM International vs. Minerals Technologies | RPM International vs. Oil Dri | RPM International vs. Quaker Chemical |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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