Correlation Between Morgan Advanced and Griffon

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

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

Diversification Opportunities for Morgan Advanced and Griffon

-0.47

Correlation Coefficient

Morgan Advanced  Griffon

Very good diversification

The 3 months correlation between Morgan and Griffon is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Morgan Advanced 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 Morgan Advanced Materials 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 Morgan Advanced i.e., Morgan Advanced and Griffon go up and down completely randomly.

Pair Corralation between Morgan Advanced and Griffon

Assuming the 90 days horizon Morgan Advanced Materials is expected to generate 1.12 times more return on investment than Griffon. However, Morgan Advanced is 1.12 times more volatile than Griffon. It trades about -0.23 of its potential returns per unit of risk. Griffon is currently generating about -0.36 per unit of risk. If you would invest  351.00  in Morgan Advanced Materials on October 8, 2024 and sell it today you would lose (26.00) from holding Morgan Advanced Materials or give up 7.41% of portfolio value over 90 days.

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

Morgan Advanced Materials  vs.  Griffon

Morgan Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators 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

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 February 2025.

Pair Trading with Morgan Advanced and Griffon

The main advantage of trading using opposite Morgan Advanced and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Advanced 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 Morgan Advanced Materials 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.