Correlation Between Griffon and H B

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

By analyzing existing cross correlation between Griffon and H B Fuller, you can compare the effects of market volatilities on Griffon and H B 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 H B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Griffon and H B.

Diversification Opportunities for Griffon and H B

-0.18

Correlation Coefficient

Griffon  H B

Good diversification

The 3 months correlation between Griffon and FUL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller 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 H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of Griffon i.e., Griffon and H B go up and down completely randomly.

Pair Corralation between Griffon and H B

Considering the 90-day investment horizon Griffon is expected to generate 2.16 times more return on investment than H B. However, Griffon is 2.16 times more volatile than H B Fuller. It trades about 0.11 of its potential returns per unit of risk. H B Fuller is currently generating about -0.11 per unit of risk. If you would invest  6,857  in Griffon on September 13, 2024 and sell it today you would earn a total of  1,047  from holding Griffon or generate 15.27% return on investment over 90 days.

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

Griffon  vs.  H B Fuller

Griffon

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 8 (%) 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.

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Griffon and H B

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

The idea behind Griffon and H B Fuller 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.