Correlation Between Ingredion Incorporated and Griffon

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

By analyzing existing cross correlation between Ingredion Incorporated and Griffon, you can compare the effects of market volatilities on Ingredion Incorporated and Griffon 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 Ingredion Incorporated with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Griffon.

Diversification Opportunities for Ingredion Incorporated and Griffon

0.55

Correlation Coefficient

Ingredion Incorporated  Griffon

Very weak diversification

The 3 months correlation between Ingredion and Griffon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Ingredion Incorporated 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 Ingredion Incorporated are associated (or correlated) with Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Griffon go up and down completely randomly.

Pair Corralation between Ingredion Incorporated and Griffon

Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 13.56 times less return on investment than Griffon. But when comparing it to its historical volatility, Ingredion Incorporated is 1.28 times less risky than Griffon. It trades about 0.01 of its potential returns per unit of risk. Griffon is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,424  in Griffon on October 23, 2024 and sell it today you would earn a total of  1,238  from holding Griffon or generate 19.27% return on investment over 90 days.

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

Ingredion Incorporated  vs.  Griffon

Ingredion Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingredion Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Ingredion Incorporated is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Griffon

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingredion Incorporated and Griffon

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

The idea behind Ingredion Incorporated and Griffon 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.