Correlation Between Hydrofarm Holdings and Deere
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and Deere 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 Deere 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 Deere Company, you can compare the effects of market volatilities on Hydrofarm Holdings and Deere 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 Deere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and Deere.
Diversification Opportunities for Hydrofarm Holdings and Deere
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hydrofarm and Deere is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and Deere Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deere Company 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 Deere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deere Company has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and Deere go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and Deere
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to under-perform the Deere. In addition to that, Hydrofarm Holdings is 3.61 times more volatile than Deere Company. It trades about -0.01 of its total potential returns per unit of risk. Deere Company is currently generating about 0.01 per unit of volatility. If you would invest 42,644 in Deere Company on August 27, 2024 and sell it today you would earn a total of 2,021 from holding Deere Company or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydrofarm Holdings Group vs. Deere Company
Performance |
| Timeline |
| Hydrofarm Holdings |
| Deere Company |
Hydrofarm Holdings and Deere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and Deere
The main advantage of trading using opposite Hydrofarm Holdings and Deere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, Deere 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 Deere will offset losses from the drop in Deere'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 |
| Deere vs. MYR Group | Deere vs. Granite Construction Incorporated | Deere vs. Construction Partners | Deere vs. Great Lakes Dredge |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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