Correlation Between LithiumBank Resources and Griffon

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

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

Diversification Opportunities for LithiumBank Resources and Griffon

-0.6

Correlation Coefficient

LithiumBank Resources  Griffon

Excellent diversification

The 3 months correlation between LithiumBank and Griffon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding LithiumBank Resources Corp and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and LithiumBank Resources 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 LithiumBank Resources Corp 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 LithiumBank Resources i.e., LithiumBank Resources and Griffon go up and down completely randomly.

Pair Corralation between LithiumBank Resources and Griffon

Assuming the 90 days horizon LithiumBank Resources Corp is expected to under-perform the Griffon. In addition to that, LithiumBank Resources is 5.61 times more volatile than Griffon. It trades about -0.04 of its total potential returns per unit of risk. Griffon is currently generating about 0.22 per unit of volatility. If you would invest  7,200  in Griffon on October 20, 2024 and sell it today you would earn a total of  462.00  from holding Griffon or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

LithiumBank Resources Corp  vs.  Griffon

LithiumBank Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LithiumBank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Griffon

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 7 (%) 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 LithiumBank Resources and Griffon

The main advantage of trading using opposite LithiumBank Resources and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LithiumBank Resources 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 LithiumBank Resources Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.