Correlation Between Vistra Energy and Griffon

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

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

Diversification Opportunities for Vistra Energy and Griffon

0.67

Correlation Coefficient

Vistra Energy  Griffon

Poor diversification

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

Pair Corralation between Vistra Energy and Griffon

Considering the 90-day investment horizon Vistra Energy Corp is expected to generate 2.96 times more return on investment than Griffon. However, Vistra Energy is 2.96 times more volatile than Griffon. It trades about 0.0 of its potential returns per unit of risk. Griffon is currently generating about 0.01 per unit of risk. If you would invest  13,698  in Vistra Energy Corp on December 19, 2024 and sell it today you would lose (1,252) from holding Vistra Energy Corp or give up 9.14% of portfolio value over 90 days.

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

Vistra Energy Corp  vs.  Griffon

Vistra Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vistra Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vistra Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Griffon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Griffon has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Vistra Energy and Griffon

The main advantage of trading using opposite Vistra Energy and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vistra Energy 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 Vistra Energy Corp 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.