Correlation Between HYDROFARM HLD and Liontown Resources
Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and Liontown Resources 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 Liontown Resources 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 Liontown Resources Limited, you can compare the effects of market volatilities on HYDROFARM HLD and Liontown Resources 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 Liontown Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and Liontown Resources.
Diversification Opportunities for HYDROFARM HLD and Liontown Resources
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between HYDROFARM and Liontown is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Liontown Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources 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 Liontown Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontown Resources has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and Liontown Resources go up and down completely randomly.
Pair Corralation between HYDROFARM HLD and Liontown Resources
Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to generate 2.14 times more return on investment than Liontown Resources. However, HYDROFARM HLD is 2.14 times more volatile than Liontown Resources Limited. It trades about 0.19 of its potential returns per unit of risk. Liontown Resources Limited is currently generating about -0.37 per unit of risk. If you would invest 52.00 in HYDROFARM HLD GRP on September 12, 2024 and sell it today you would earn a total of 12.00 from holding HYDROFARM HLD GRP or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HYDROFARM HLD GRP vs. Liontown Resources Limited
Performance |
| Timeline |
| HYDROFARM HLD GRP |
| Liontown Resources |
HYDROFARM HLD and Liontown Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYDROFARM HLD and Liontown Resources
The main advantage of trading using opposite HYDROFARM HLD and Liontown Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, Liontown Resources 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 Liontown Resources will offset losses from the drop in Liontown Resources' long position.| HYDROFARM HLD vs. AB Volvo | HYDROFARM HLD vs. Daimler Truck Holding | HYDROFARM HLD vs. Superior Plus Corp | HYDROFARM HLD vs. SIVERS SEMICONDUCTORS AB |
| Liontown Resources vs. American Lithium Corp | Liontown Resources vs. ADRIATIC METALS LS 013355 | Liontown Resources vs. Superior Plus Corp | Liontown Resources vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |