Correlation Between Griffon and Dominos Pizza

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

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

Diversification Opportunities for Griffon and Dominos Pizza

-0.42

Correlation Coefficient

Griffon  Dominos Pizza

Very good diversification

The 3 months correlation between Griffon and Dominos is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and Dominos Pizza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Group and Griffon 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 Griffon are associated (or correlated) with Dominos Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominos Pizza Group has no effect on the direction of Griffon i.e., Griffon and Dominos Pizza go up and down completely randomly.

Pair Corralation between Griffon and Dominos Pizza

Considering the 90-day investment horizon Griffon is expected to generate 1.28 times more return on investment than Dominos Pizza. However, Griffon is 1.28 times more volatile than Dominos Pizza Group. It trades about 0.09 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.05 per unit of risk. If you would invest  4,016  in Griffon on September 12, 2024 and sell it today you would earn a total of  3,991  from holding Griffon or generate 99.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	34.74%
Values	Daily Returns

Griffon  vs.  Dominos Pizza Group

Griffon

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon reported solid returns over the last few months and may actually be approaching a breakup point.

Dominos Pizza Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dominos Pizza Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dominos Pizza is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Griffon and Dominos Pizza

The main advantage of trading using opposite Griffon and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffon position performs unexpectedly, Dominos Pizza 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 Dominos Pizza will offset losses from the drop in Dominos Pizza's long position.

The idea behind Griffon and Dominos Pizza Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.