Correlation Between Daimler Truck and Hydrofarm Holdings
Can any of the company-specific risk be diversified away by investing in both Daimler Truck 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 Daimler Truck and Hydrofarm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daimler Truck Holding and Hydrofarm Holdings Group, you can compare the effects of market volatilities on Daimler Truck 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 Daimler Truck with a short position of Hydrofarm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daimler Truck and Hydrofarm Holdings.
Diversification Opportunities for Daimler Truck and Hydrofarm Holdings
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daimler and Hydrofarm is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Daimler Truck Holding and Hydrofarm Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrofarm Holdings and Daimler Truck 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 Daimler Truck Holding 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 Daimler Truck i.e., Daimler Truck and Hydrofarm Holdings go up and down completely randomly.
Pair Corralation between Daimler Truck and Hydrofarm Holdings
Assuming the 90 days horizon Daimler Truck is expected to generate 1.45 times less return on investment than Hydrofarm Holdings. But when comparing it to its historical volatility, Daimler Truck Holding is 3.05 times less risky than Hydrofarm Holdings. It trades about 0.04 of its potential returns per unit of risk. Hydrofarm Holdings Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Hydrofarm Holdings Group on August 31, 2024 and sell it today you would lose (13.00) from holding Hydrofarm Holdings Group or give up 13.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daimler Truck Holding vs. Hydrofarm Holdings Group
Performance |
| Timeline |
| Daimler Truck Holding |
| Hydrofarm Holdings |
Daimler Truck and Hydrofarm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daimler Truck and Hydrofarm Holdings
The main advantage of trading using opposite Daimler Truck and Hydrofarm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daimler Truck 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.| Daimler Truck vs. Volvo AB ADR | Daimler Truck vs. Deere Company | Daimler Truck vs. Volvo AB ser | Daimler Truck vs. Oshkosh |
| 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 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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