Correlation Between Hydrofarm Holdings and Open Lending
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and Open Lending 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 Open Lending 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 Open Lending Corp, you can compare the effects of market volatilities on Hydrofarm Holdings and Open Lending 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 Open Lending. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and Open Lending.
Diversification Opportunities for Hydrofarm Holdings and Open Lending
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hydrofarm and Open is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp 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 Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and Open Lending go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and Open Lending
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to generate 1.84 times more return on investment than Open Lending. However, Hydrofarm Holdings is 1.84 times more volatile than Open Lending Corp. It trades about 0.07 of its potential returns per unit of risk. Open Lending Corp is currently generating about -0.29 per unit of risk. If you would invest 61.00 in Hydrofarm Holdings Group on October 26, 2024 and sell it today you would earn a total of 2.62 from holding Hydrofarm Holdings Group or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydrofarm Holdings Group vs. Open Lending Corp
Performance |
| Timeline |
| Hydrofarm Holdings |
| Open Lending Corp |
Hydrofarm Holdings and Open Lending Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and Open Lending
The main advantage of trading using opposite Hydrofarm Holdings and Open Lending positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, Open Lending 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 Open Lending will offset losses from the drop in Open Lending'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 |
| Open Lending vs. EZCORP Inc | Open Lending vs. Orix Corp Ads | Open Lending vs. SLM Corp | Open Lending vs. Navient 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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