Correlation Between CNH Industrial and Hydrofarm Holdings
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Hydrofarm Holdings 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 CNH Industrial and Hydrofarm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and Hydrofarm Holdings Group, you can compare the effects of market volatilities on CNH Industrial and Hydrofarm Holdings 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 CNH Industrial with a short position of Hydrofarm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Hydrofarm Holdings.
Diversification Opportunities for CNH Industrial and Hydrofarm Holdings
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNH and Hydrofarm is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Hydrofarm Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrofarm Holdings and CNH Industrial 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 CNH Industrial NV are associated (or correlated) with Hydrofarm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrofarm Holdings has no effect on the direction of CNH Industrial i.e., CNH Industrial and Hydrofarm Holdings go up and down completely randomly.
Pair Corralation between CNH Industrial and Hydrofarm Holdings
Given the investment horizon of 90 days CNH Industrial NV is expected to under-perform the Hydrofarm Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CNH Industrial NV is 2.12 times less risky than Hydrofarm Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Hydrofarm Holdings Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 123.00 in Hydrofarm Holdings Group on August 31, 2024 and sell it today you would lose (40.00) from holding Hydrofarm Holdings Group or give up 32.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 63.94% |
| Values | Daily Returns |
CNH Industrial NV vs. Hydrofarm Holdings Group
Performance |
| Timeline |
| CNH Industrial NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hydrofarm Holdings |
CNH Industrial and Hydrofarm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Hydrofarm Holdings
The main advantage of trading using opposite CNH Industrial and Hydrofarm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Hydrofarm Holdings 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 Holdings will offset losses from the drop in Hydrofarm Holdings' long position.| CNH Industrial vs. Deere Company | CNH Industrial vs. Lindsay | CNH Industrial vs. Alamo Group | CNH Industrial vs. Caterpillar |
| Hydrofarm Holdings vs. Gencor Industries | Hydrofarm Holdings vs. CEA Industries | Hydrofarm Holdings vs. Arts Way Manufacturing Co | Hydrofarm Holdings vs. CubicFarm Systems Corp |
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 Directory module to find actively traded commodities issued by global exchanges.
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