Correlation Between Hydrofarm Holdings and Nikola Corp
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and Nikola Corp 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 Nikola Corp 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 Nikola Corp, you can compare the effects of market volatilities on Hydrofarm Holdings and Nikola Corp 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 Nikola Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and Nikola Corp.
Diversification Opportunities for Hydrofarm Holdings and Nikola Corp
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hydrofarm and Nikola is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and Nikola Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikola 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 Nikola Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nikola Corp has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and Nikola Corp go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and Nikola Corp
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to generate 0.75 times more return on investment than Nikola Corp. However, Hydrofarm Holdings Group is 1.33 times less risky than Nikola Corp. It trades about -0.01 of its potential returns per unit of risk. Nikola Corp is currently generating about -0.06 per unit of risk. If you would invest 242.00 in Hydrofarm Holdings Group on August 27, 2024 and sell it today you would lose (169.00) from holding Hydrofarm Holdings Group or give up 69.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydrofarm Holdings Group vs. Nikola Corp
Performance |
| Timeline |
| Hydrofarm Holdings |
| Nikola Corp |
Hydrofarm Holdings and Nikola Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and Nikola Corp
The main advantage of trading using opposite Hydrofarm Holdings and Nikola Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, Nikola Corp 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 Nikola Corp will offset losses from the drop in Nikola Corp'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 |
| Nikola Corp vs. Lion Electric Corp | Nikola Corp vs. Xos Inc | Nikola Corp vs. Hydrofarm Holdings Group | Nikola Corp vs. Caterpillar |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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