Correlation Between Matthews International and Griffon

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

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

Diversification Opportunities for Matthews International and Griffon

-0.16

Correlation Coefficient

Matthews International  Griffon

Good diversification

The 3 months correlation between Matthews and Griffon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Matthews International and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Matthews International 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 Matthews International 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 Matthews International i.e., Matthews International and Griffon go up and down completely randomly.

Pair Corralation between Matthews International and Griffon

Given the investment horizon of 90 days Matthews International is expected to generate 1.05 times more return on investment than Griffon. However, Matthews International is 1.05 times more volatile than Griffon. It trades about 0.04 of its potential returns per unit of risk. Griffon is currently generating about -0.09 per unit of risk. If you would invest  2,822  in Matthews International on February 4, 2024 and sell it today you would earn a total of  37.00  from holding Matthews International or generate 1.31% return on investment over 90 days.

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

Matthews International  vs.  Griffon

Matthews International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Matthews International is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Matthews International and Griffon

The main advantage of trading using opposite Matthews International and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews International 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 Matthews International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..