Correlation Between HomeToGo and HYDROFARM HLD
Can any of the company-specific risk be diversified away by investing in both HomeToGo 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 HomeToGo and HYDROFARM HLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and HYDROFARM HLD GRP, you can compare the effects of market volatilities on HomeToGo 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 HomeToGo with a short position of HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and HYDROFARM HLD.
Diversification Opportunities for HomeToGo and HYDROFARM HLD
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between HomeToGo and HYDROFARM is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE 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 HomeToGo 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 HomeToGo SE 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 HomeToGo i.e., HomeToGo and HYDROFARM HLD go up and down completely randomly.
Pair Corralation between HomeToGo and HYDROFARM HLD
Assuming the 90 days trading horizon HomeToGo SE is expected to generate 0.86 times more return on investment than HYDROFARM HLD. However, HomeToGo SE is 1.17 times less risky than HYDROFARM HLD. It trades about -0.06 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about -0.21 per unit of risk. If you would invest 209.00 in HomeToGo SE on September 25, 2024 and sell it today you would lose (12.00) from holding HomeToGo SE or give up 5.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. HYDROFARM HLD GRP
Performance |
| Timeline |
| HomeToGo SE |
| HYDROFARM HLD GRP |
HomeToGo and HYDROFARM HLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and HYDROFARM HLD
The main advantage of trading using opposite HomeToGo and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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.| HomeToGo vs. Alphabet Class A | HomeToGo vs. Alphabet | HomeToGo vs. Meta Platforms | HomeToGo vs. Tencent Holdings Ltd |
| HYDROFARM HLD vs. Caterpillar | HYDROFARM HLD vs. Caterpillar | HYDROFARM HLD vs. Deere Company | HYDROFARM HLD vs. AB Volvo |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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