Correlation Between HYDROFARM HLD and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies, you can compare the effects of market volatilities on HYDROFARM HLD and L3Harris Technologies 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 L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and L3Harris Technologies.
Diversification Opportunities for HYDROFARM HLD and L3Harris Technologies
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between HYDROFARM and L3Harris is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and L3Harris Technologies go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and L3Harris Technologies
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to under-perform the L3Harris Technologies. In addition to that, HYDROFARM HLD is 3.49 times more volatile than L3Harris Technologies. It trades about -0.26 of its total potential returns per unit of risk. L3Harris Technologies is currently generating about -0.39 per unit of volatility. If you would invest 21,700 in L3Harris Technologies on October 9, 2024 and sell it today you would lose (1,390) from holding L3Harris Technologies or give up 6.41% 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. L3Harris Technologies
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| L3Harris Technologies |
HYDROFARM HLD and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and L3Harris Technologies
The main advantage of trading using opposite HYDROFARM HLD and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. NMI Holdings | HYDROFARM HLD vs. SIVERS SEMICONDUCTORS AB | HYDROFARM HLD vs. Talanx 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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