Correlation Between SWISS WATER and HYDROFARM HLD
Can any of the company-specific risk be diversified away by investing in both SWISS WATER and HYDROFARM HLD 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 SWISS WATER and HYDROFARM HLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and HYDROFARM HLD GRP, you can compare the effects of market volatilities on SWISS WATER and HYDROFARM HLD 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 SWISS WATER with a short position of HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and HYDROFARM HLD.
Diversification Opportunities for SWISS WATER and HYDROFARM HLD
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SWISS and HYDROFARM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP and SWISS WATER 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 SWISS WATER DECAFFCOFFEE are associated (or correlated) with HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of SWISS WATER i.e., SWISS WATER and HYDROFARM HLD go up and down completely randomly.
Pair Corralation between SWISS WATER and HYDROFARM HLD
Assuming the 90 days horizon SWISS WATER is expected to generate 4.11 times less return on investment than HYDROFARM HLD. But when comparing it to its historical volatility, SWISS WATER DECAFFCOFFEE is 2.02 times less risky than HYDROFARM HLD. It trades about 0.11 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 40.00 in HYDROFARM HLD GRP on September 2, 2024 and sell it today you would earn a total of 37.00 from holding HYDROFARM HLD GRP or generate 92.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. HYDROFARM HLD GRP
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| HYDROFARM HLD GRP |
SWISS WATER and HYDROFARM HLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and HYDROFARM HLD
The main advantage of trading using opposite SWISS WATER and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER position performs unexpectedly, HYDROFARM HLD 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 HYDROFARM HLD will offset losses from the drop in HYDROFARM HLD's long position.| SWISS WATER vs. Molson Coors Beverage | SWISS WATER vs. Suntory Beverage Food | SWISS WATER vs. COSMOSTEEL HLDGS | SWISS WATER vs. Khiron Life Sciences |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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