Correlation Between HYDROFARM HLD and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and PennantPark Investment 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 HYDROFARM HLD and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYDROFARM HLD GRP and PennantPark Investment, you can compare the effects of market volatilities on HYDROFARM HLD and PennantPark Investment 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 HYDROFARM HLD with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and PennantPark Investment.
Diversification Opportunities for HYDROFARM HLD and PennantPark Investment
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HYDROFARM and PennantPark is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and HYDROFARM HLD 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 HYDROFARM HLD GRP are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and PennantPark Investment go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and PennantPark Investment
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to under-perform the PennantPark Investment. In addition to that, HYDROFARM HLD is 2.63 times more volatile than PennantPark Investment. It trades about -0.01 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.07 per unit of volatility. If you would invest 508.00 in PennantPark Investment on August 26, 2024 and sell it today you would earn a total of 148.00 from holding PennantPark Investment or generate 29.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYDROFARM HLD GRP vs. PennantPark Investment
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| PennantPark Investment |
HYDROFARM HLD and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and PennantPark Investment
The main advantage of trading using opposite HYDROFARM HLD and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. Origin Agritech | HYDROFARM HLD vs. SIVERS SEMICONDUCTORS AB |
| PennantPark Investment vs. JJ SNACK FOODS | PennantPark Investment vs. MONEYSUPERMARKET | PennantPark Investment vs. CONAGRA FOODS | PennantPark Investment vs. AUSNUTRIA DAIRY |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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