Correlation Between Hydrofarm Holdings and Textainer Group
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and Textainer Group 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 Textainer Group 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 Textainer Group Holdings, you can compare the effects of market volatilities on Hydrofarm Holdings and Textainer Group 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 Textainer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and Textainer Group.
Diversification Opportunities for Hydrofarm Holdings and Textainer Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hydrofarm and Textainer is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings 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 Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and Textainer Group go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and Textainer Group
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to under-perform the Textainer Group. In addition to that, Hydrofarm Holdings is 1.63 times more volatile than Textainer Group Holdings. It trades about -0.02 of its total potential returns per unit of risk. Textainer Group Holdings is currently generating about 0.06 per unit of volatility. If you would invest 36.00 in Textainer Group Holdings on August 24, 2024 and sell it today you would earn a total of 40.00 from holding Textainer Group Holdings or generate 111.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydrofarm Holdings Group vs. Textainer Group Holdings
Performance |
| Timeline |
| Hydrofarm Holdings |
| Textainer Group Holdings |
Hydrofarm Holdings and Textainer Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and Textainer Group
The main advantage of trading using opposite Hydrofarm Holdings and Textainer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, Textainer Group 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 Textainer Group will offset losses from the drop in Textainer Group'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 |
| Textainer Group vs. Lion Electric Corp | Textainer Group vs. Nikola Corp | Textainer Group vs. Buhler Industries | Textainer Group vs. Toyota Industries |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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