Correlation Between Griffon and SOUTHERN

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

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

Diversification Opportunities for Griffon and SOUTHERN

-0.18

Correlation Coefficient

Griffon  SOUTHERN

Good diversification

The 3 months correlation between Griffon and SOUTHERN is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN PER P has no effect on the direction of Griffon i.e., Griffon and SOUTHERN go up and down completely randomly.

Pair Corralation between Griffon and SOUTHERN

Considering the 90-day investment horizon Griffon is expected to generate 4.24 times more return on investment than SOUTHERN. However, Griffon is 4.24 times more volatile than SOUTHERN PER CORP. It trades about 0.07 of its potential returns per unit of risk. SOUTHERN PER CORP is currently generating about 0.19 per unit of risk. If you would invest  7,388  in Griffon on September 19, 2024 and sell it today you would earn a total of  184.00  from holding Griffon or generate 2.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Griffon  vs.  SOUTHERN PER 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 January 2025.

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Griffon and SOUTHERN

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

The idea behind Griffon and SOUTHERN PER 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.