Correlation Between HYDROFARM HLD and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and GAMESTOP 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 GAMESTOP 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 GAMESTOP, you can compare the effects of market volatilities on HYDROFARM HLD and GAMESTOP 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 GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and GAMESTOP.
Diversification Opportunities for HYDROFARM HLD and GAMESTOP
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between HYDROFARM and GAMESTOP is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP 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 GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and GAMESTOP go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and GAMESTOP
Assuming the 90 days trading horizon HYDROFARM HLD is expected to generate 2.22 times less return on investment than GAMESTOP. But when comparing it to its historical volatility, HYDROFARM HLD GRP is 1.75 times less risky than GAMESTOP. It trades about 0.04 of its potential returns per unit of risk. GAMESTOP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,495 in GAMESTOP on September 2, 2024 and sell it today you would earn a total of 207.00 from holding GAMESTOP or generate 8.3% 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. GAMESTOP
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| GAMESTOP |
HYDROFARM HLD and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and GAMESTOP
The main advantage of trading using opposite HYDROFARM HLD and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, GAMESTOP 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 GAMESTOP will offset losses from the drop in GAMESTOP's long position.The idea behind HYDROFARM HLD GRP and GAMESTOP 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.| GAMESTOP vs. SIVERS SEMICONDUCTORS AB | GAMESTOP vs. Darden Restaurants | GAMESTOP vs. Reliance Steel Aluminum | GAMESTOP vs. Q2M Managementberatung AG |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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