Correlation Between SEI Investments and Griffon

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

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

Diversification Opportunities for SEI Investments and Griffon

0.72

Correlation Coefficient

SEI Investments  Griffon

Poor diversification

The 3 months correlation between SEI and Griffon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and SEI Investments 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 SEI Investments 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 SEI Investments i.e., SEI Investments and Griffon go up and down completely randomly.

Pair Corralation between SEI Investments and Griffon

Given the investment horizon of 90 days SEI Investments is expected to under-perform the Griffon. But the stock apears to be less risky and, when comparing its historical volatility, SEI Investments is 1.62 times less risky than Griffon. The stock trades about -0.06 of its potential returns per unit of risk. The Griffon is currently generating about 0.02 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	100.0%
Values	Daily Returns

SEI Investments  vs.  Griffon

SEI Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEI Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, SEI Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with SEI Investments and Griffon

The main advantage of trading using opposite SEI Investments and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments 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 SEI Investments 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.