Correlation Between Hydrofarm Holdings and Terex
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and Terex 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 Terex 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 Terex, you can compare the effects of market volatilities on Hydrofarm Holdings and Terex 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 Terex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and Terex.
Diversification Opportunities for Hydrofarm Holdings and Terex
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hydrofarm and Terex is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and Terex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terex 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 Terex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terex has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and Terex go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and Terex
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to under-perform the Terex. In addition to that, Hydrofarm Holdings is 1.73 times more volatile than Terex. It trades about 0.0 of its total potential returns per unit of risk. Terex is currently generating about 0.0 per unit of volatility. If you would invest 5,666 in Terex on August 27, 2024 and sell it today you would lose (286.00) from holding Terex or give up 5.05% 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. Terex
Performance |
| Timeline |
| Hydrofarm Holdings |
| Terex |
Hydrofarm Holdings and Terex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and Terex
The main advantage of trading using opposite Hydrofarm Holdings and Terex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, Terex 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 Terex will offset losses from the drop in Terex'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 |
| Terex vs. Lion Electric Corp | Terex vs. Xos Inc | Terex vs. Hydrofarm Holdings Group | Terex vs. AGCO Corporation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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