Correlation Between Griffon and Where Food

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

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

Diversification Opportunities for Griffon and Where Food

0.44

Correlation Coefficient

Griffon  Where Food

Very weak diversification

The 3 months correlation between Griffon and Where is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Where Food Comes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Where Food Comes 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 Where Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Where Food Comes has no effect on the direction of Griffon i.e., Griffon and Where Food go up and down completely randomly.

Pair Corralation between Griffon and Where Food

Considering the 90-day investment horizon Griffon is expected to generate 0.75 times more return on investment than Where Food. However, Griffon is 1.34 times less risky than Where Food. It trades about 0.02 of its potential returns per unit of risk. Where Food Comes is currently generating about -0.05 per unit of risk. If you would invest  7,086  in Griffon on December 28, 2024 and sell it today you would earn a total of  110.00  from holding Griffon or generate 1.55% return on investment over 90 days.

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

Griffon  vs.  Where Food Comes

Griffon

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Griffon is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Where Food Comes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Where Food Comes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Griffon and Where Food

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

The idea behind Griffon and Where Food Comes 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 Transaction History module to view history of all your transactions and understand their impact on performance.