Correlation Between Hydrofarm Holdings and American Premium
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and American Premium 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 American Premium 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 American Premium Water, you can compare the effects of market volatilities on Hydrofarm Holdings and American Premium 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 American Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and American Premium.
Diversification Opportunities for Hydrofarm Holdings and American Premium
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hydrofarm and American is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and American Premium Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Premium Water 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 American Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Premium Water has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and American Premium go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and American Premium
Given the investment horizon of 90 days Hydrofarm Holdings is expected to generate 437.11 times less return on investment than American Premium. But when comparing it to its historical volatility, Hydrofarm Holdings Group is 88.37 times less risky than American Premium. It trades about 0.07 of its potential returns per unit of risk. American Premium Water is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 0.00 in American Premium Water on November 3, 2024 and sell it today you would earn a total of 0.00 from holding American Premium Water or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Hydrofarm Holdings Group vs. American Premium Water
Performance |
| Timeline |
| Hydrofarm Holdings |
| American Premium Water |
Hydrofarm Holdings and American Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and American Premium
The main advantage of trading using opposite Hydrofarm Holdings and American Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, American Premium 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 American Premium will offset losses from the drop in American Premium'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 |
| American Premium vs. First Tractor | American Premium vs. Ag Growth International | American Premium vs. AmeraMex International | American Premium vs. Arts Way Manufacturing Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |