Correlation Between World Kinect and Griffon

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

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

Diversification Opportunities for World Kinect and Griffon

0.26

Correlation Coefficient

World Kinect  Griffon

Modest diversification

The 3 months correlation between World and Griffon is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding World Kinect and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and World Kinect 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 World Kinect 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 World Kinect i.e., World Kinect and Griffon go up and down completely randomly.

Pair Corralation between World Kinect and Griffon

Considering the 90-day investment horizon World Kinect is expected to generate 0.97 times more return on investment than Griffon. However, World Kinect is 1.03 times less risky than Griffon. It trades about 0.03 of its potential returns per unit of risk. Griffon is currently generating about -0.1 per unit of risk. If you would invest  2,915  in World Kinect on December 2, 2024 and sell it today you would earn a total of  79.00  from holding World Kinect or generate 2.71% return on investment over 90 days.

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

World Kinect  vs.  Griffon

World Kinect

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in World Kinect are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, World Kinect is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with World Kinect and Griffon

The main advantage of trading using opposite World Kinect and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Kinect 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 World Kinect 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.