Correlation Between 665859AT1 and Griffon

Can any of the company-specific risk be diversified away by investing in both 665859AT1 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 665859AT1 and Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NORTHERN TR P and Griffon, you can compare the effects of market volatilities on 665859AT1 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 665859AT1 with a short position of Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of 665859AT1 and Griffon.

Diversification Opportunities for 665859AT1 and Griffon

-0.15

Correlation Coefficient

665859AT1  Griffon

Good diversification

The 3 months correlation between 665859AT1 and Griffon is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NORTHERN TR P and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and 665859AT1 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 NORTHERN TR P 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 665859AT1 i.e., 665859AT1 and Griffon go up and down completely randomly.

Pair Corralation between 665859AT1 and Griffon

Assuming the 90 days trading horizon NORTHERN TR P is expected to generate 0.19 times more return on investment than Griffon. However, NORTHERN TR P is 5.22 times less risky than Griffon. It trades about -0.26 of its potential returns per unit of risk. Griffon is currently generating about -0.48 per unit of risk. If you would invest  9,733  in NORTHERN TR P on October 3, 2024 and sell it today you would lose (157.00) from holding NORTHERN TR P or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

NORTHERN TR P  vs.  Griffon

NORTHERN TR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHERN TR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 665859AT1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Griffon

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 2 (%) 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 665859AT1 and Griffon

The main advantage of trading using opposite 665859AT1 and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 665859AT1 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 NORTHERN TR P 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.