Correlation Between HYDROFARM HLD and Granite Construction
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and Granite Construction 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 Granite Construction 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 Granite Construction, you can compare the effects of market volatilities on HYDROFARM HLD and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and Granite Construction.
Diversification Opportunities for HYDROFARM HLD and Granite Construction
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HYDROFARM and Granite is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and Granite Construction go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and Granite Construction
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to under-perform the Granite Construction. In addition to that, HYDROFARM HLD is 2.85 times more volatile than Granite Construction. It trades about 0.0 of its total potential returns per unit of risk. Granite Construction is currently generating about 0.11 per unit of volatility. If you would invest 3,240 in Granite Construction on September 4, 2024 and sell it today you would earn a total of 6,160 from holding Granite Construction or generate 190.12% 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. Granite Construction
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| Granite Construction |
HYDROFARM HLD and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and Granite Construction
The main advantage of trading using opposite HYDROFARM HLD and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| HYDROFARM HLD vs. VOLVO B UNSPADR | HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. Origin Agritech |
| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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