Correlation Between Tejon Ranch and Griffon

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

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

Diversification Opportunities for Tejon Ranch and Griffon

0.19

Correlation Coefficient

Tejon Ranch  Griffon

Average diversification

The 1 month correlation between Tejon and Griffon is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tejon Ranch Co and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon and Tejon Ranch 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 Tejon Ranch Co 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 Tejon Ranch i.e., Tejon Ranch and Griffon go up and down completely randomly.

Pair Corralation between Tejon Ranch and Griffon

Considering the 90-day investment horizon Tejon Ranch Co is expected to generate 0.81 times more return on investment than Griffon. However, Tejon Ranch Co is 1.24 times less risky than Griffon. It trades about 0.17 of its potential returns per unit of risk. Griffon is currently generating about 0.08 per unit of risk. If you would invest  1,498  in Tejon Ranch Co on February 14, 2024 and sell it today you would earn a total of  110.00  from holding Tejon Ranch Co or generate 7.34% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tejon Ranch Co  vs.  Griffon

Tejon Ranch

Risk-Adjusted Performance

13 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tejon Ranch Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Tejon Ranch exhibited solid returns over the last few months and may actually be approaching a breakup point.

Griffon

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Griffon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tejon Ranch and Griffon

The main advantage of trading using opposite Tejon Ranch and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tejon Ranch 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 Tejon Ranch Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.