Correlation Between HYDROFARM HLD and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on HYDROFARM HLD and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and Fevertree Drinks.
Diversification Opportunities for HYDROFARM HLD and Fevertree Drinks
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HYDROFARM and Fevertree is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and Fevertree Drinks go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and Fevertree Drinks
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to generate 2.18 times more return on investment than Fevertree Drinks. However, HYDROFARM HLD is 2.18 times more volatile than Fevertree Drinks PLC. It trades about -0.02 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.2 per unit of risk. If you would invest 61.00 in HYDROFARM HLD GRP on August 25, 2024 and sell it today you would lose (3.00) from holding HYDROFARM HLD GRP or give up 4.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYDROFARM HLD GRP vs. Fevertree Drinks PLC
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| Fevertree Drinks PLC |
HYDROFARM HLD and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and Fevertree Drinks
The main advantage of trading using opposite HYDROFARM HLD and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| HYDROFARM HLD vs. AB Volvo | HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. Origin Agritech |
| Fevertree Drinks vs. Media and Games | Fevertree Drinks vs. FUTURE GAMING GRP | Fevertree Drinks vs. TROPHY GAMES DEV | Fevertree Drinks vs. Microchip Technology Incorporated |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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