Correlation Between CubicFarm Systems and Hydrofarm Holdings
Can any of the company-specific risk be diversified away by investing in both CubicFarm Systems 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 CubicFarm Systems and Hydrofarm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubicFarm Systems Corp and Hydrofarm Holdings Group, you can compare the effects of market volatilities on CubicFarm Systems 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 CubicFarm Systems with a short position of Hydrofarm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubicFarm Systems and Hydrofarm Holdings.
Diversification Opportunities for CubicFarm Systems and Hydrofarm Holdings
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CubicFarm and Hydrofarm is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CubicFarm Systems Corp and Hydrofarm Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrofarm Holdings and CubicFarm Systems 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 CubicFarm Systems Corp 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 CubicFarm Systems i.e., CubicFarm Systems and Hydrofarm Holdings go up and down completely randomly.
Pair Corralation between CubicFarm Systems and Hydrofarm Holdings
Assuming the 90 days horizon CubicFarm Systems Corp is expected to generate 19.01 times more return on investment than Hydrofarm Holdings. However, CubicFarm Systems is 19.01 times more volatile than Hydrofarm Holdings Group. It trades about 0.28 of its potential returns per unit of risk. Hydrofarm Holdings Group is currently generating about 0.15 per unit of risk. If you would invest 3.25 in CubicFarm Systems Corp on August 27, 2024 and sell it today you would earn a total of 5.45 from holding CubicFarm Systems Corp or generate 167.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CubicFarm Systems Corp vs. Hydrofarm Holdings Group
Performance |
| Timeline |
| CubicFarm Systems Corp |
| Hydrofarm Holdings |
CubicFarm Systems and Hydrofarm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CubicFarm Systems and Hydrofarm Holdings
The main advantage of trading using opposite CubicFarm Systems and Hydrofarm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubicFarm Systems 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.| CubicFarm Systems vs. Lion Electric Corp | CubicFarm Systems vs. Nikola Corp | CubicFarm Systems vs. Buhler Industries | CubicFarm Systems vs. Toyota Industries |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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