Correlation Between HYDROFARM HLD and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on HYDROFARM HLD and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and Deutsche Telekom.
Diversification Opportunities for HYDROFARM HLD and Deutsche Telekom
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HYDROFARM and Deutsche is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and Deutsche Telekom go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and Deutsche Telekom
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to generate 6.85 times more return on investment than Deutsche Telekom. However, HYDROFARM HLD is 6.85 times more volatile than Deutsche Telekom AG. It trades about 0.1 of its potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.2 per unit of risk. If you would invest 62.00 in HYDROFARM HLD GRP on August 30, 2024 and sell it today you would earn a total of 7.00 from holding HYDROFARM HLD GRP or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYDROFARM HLD GRP vs. Deutsche Telekom AG
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| Deutsche Telekom |
HYDROFARM HLD and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and Deutsche Telekom
The main advantage of trading using opposite HYDROFARM HLD and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| HYDROFARM HLD vs. Daimler Truck Holding | HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. Origin Agritech |
| Deutsche Telekom vs. DELTA AIR LINES | Deutsche Telekom vs. Enter Air SA | Deutsche Telekom vs. CarsalesCom | Deutsche Telekom vs. Air New Zealand |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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