Correlation Between Hydrofarm Holdings and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and CNH Industrial 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 Hydrofarm Holdings and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydrofarm Holdings Group and CNH Industrial NV, you can compare the effects of market volatilities on Hydrofarm Holdings and CNH Industrial 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 Hydrofarm Holdings with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and CNH Industrial.
Diversification Opportunities for Hydrofarm Holdings and CNH Industrial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hydrofarm and CNH is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and Hydrofarm Holdings 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 Hydrofarm Holdings Group are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and CNH Industrial go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and CNH Industrial
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to generate 2.12 times more return on investment than CNH Industrial. However, Hydrofarm Holdings is 2.12 times more volatile than CNH Industrial NV. It trades about 0.01 of its potential returns per unit of risk. CNH Industrial NV is currently generating about -0.03 per unit of risk. 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 |
Hydrofarm Holdings Group vs. CNH Industrial NV
Performance |
| Timeline |
| Hydrofarm Holdings |
| CNH Industrial NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hydrofarm Holdings and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and CNH Industrial
The main advantage of trading using opposite Hydrofarm Holdings and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Hydrofarm Holdings vs. Gencor Industries | Hydrofarm Holdings vs. CEA Industries | Hydrofarm Holdings vs. Arts Way Manufacturing Co | Hydrofarm Holdings vs. CubicFarm Systems Corp |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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