Correlation Between Griffon and AstraZeneca PLC

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

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

Diversification Opportunities for Griffon and AstraZeneca PLC

-0.55

Correlation Coefficient

Griffon  AstraZeneca PLC

Excellent diversification

The 3 months correlation between Griffon and AstraZeneca is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Griffon i.e., Griffon and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Griffon and AstraZeneca PLC

Considering the 90-day investment horizon Griffon is expected to under-perform the AstraZeneca PLC. In addition to that, Griffon is 1.87 times more volatile than AstraZeneca PLC ADR. It trades about -0.06 of its total potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about -0.04 per unit of volatility. If you would invest  7,918  in AstraZeneca PLC ADR on March 22, 2024 and sell it today you would lose (76.00) from holding AstraZeneca PLC ADR or give up 0.96% of portfolio value over 90 days.

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

Griffon  vs.  AstraZeneca PLC ADR

Griffon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Griffon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal 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.

AstraZeneca PLC ADR

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC ADR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, AstraZeneca PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Griffon and AstraZeneca PLC

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

The idea behind Griffon and AstraZeneca PLC ADR 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..