Correlation Between Volaris and Griffon

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

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

Diversification Opportunities for Volaris and Griffon

0.67

Correlation Coefficient

Volaris  Griffon

Poor diversification

The 3 months correlation between Volaris and Griffon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Volaris and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Volaris 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 Volaris 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 Volaris i.e., Volaris and Griffon go up and down completely randomly.

Pair Corralation between Volaris and Griffon

Given the investment horizon of 90 days Volaris is expected to under-perform the Griffon. In addition to that, Volaris is 1.56 times more volatile than Griffon. It trades about -0.13 of its total potential returns per unit of risk. Griffon is currently generating about 0.02 per unit of volatility. If you would invest  7,086  in Griffon on December 29, 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

Volaris  vs.  Griffon

Volaris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volaris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 Volaris and Griffon

The main advantage of trading using opposite Volaris and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volaris 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 Volaris 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.