Correlation Between LENSAR and Griffon

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

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

Diversification Opportunities for LENSAR and Griffon

0.69

Correlation Coefficient

LENSAR  Griffon

Poor diversification

The 3 months correlation between LENSAR and Griffon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and LENSAR 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 LENSAR Inc 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 LENSAR i.e., LENSAR and Griffon go up and down completely randomly.

Pair Corralation between LENSAR and Griffon

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.95 times more return on investment than Griffon. However, LENSAR is 1.95 times more volatile than Griffon. It trades about 0.09 of its potential returns per unit of risk. Griffon is currently generating about 0.09 per unit of risk. If you would invest  299.00  in LENSAR Inc on September 26, 2024 and sell it today you would earn a total of  582.00  from holding LENSAR Inc or generate 194.65% return on investment over 90 days.

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

LENSAR Inc  vs.  Griffon

LENSAR Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Griffon

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 3 (%) 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.

Pair Trading with LENSAR and Griffon

The main advantage of trading using opposite LENSAR and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LENSAR 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 LENSAR Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..