Correlation Between Griffon and NN

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

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

Diversification Opportunities for Griffon and NN

0.38

Correlation Coefficient

Griffon  NN

Weak diversification

The 3 months correlation between Griffon and NN is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Griffon and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc 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 NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Griffon i.e., Griffon and NN go up and down completely randomly.

Pair Corralation between Griffon and NN

Considering the 90-day investment horizon Griffon is expected to generate 1.42 times less return on investment than NN. But when comparing it to its historical volatility, Griffon is 2.71 times less risky than NN. It trades about 0.13 of its potential returns per unit of risk. NN Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  189.00  in NN Inc on May 6, 2025 and sell it today you would earn a total of  29.00  from holding NN Inc or generate 15.34% return on investment over 90 days.

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

Griffon  vs.  NN Inc

Griffon

Risk-Adjusted Performance

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 abnormal technical and fundamental indicators, Griffon reported solid returns over the last few months and may actually be approaching a breakup point.

NN Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NN Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, NN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Griffon and NN

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

The idea behind Griffon and NN Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.