Correlation Between Hydrofarm Holdings and Wabash National
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and Wabash National 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 Wabash National 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 Wabash National, you can compare the effects of market volatilities on Hydrofarm Holdings and Wabash National 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 Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and Wabash National.
Diversification Opportunities for Hydrofarm Holdings and Wabash National
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hydrofarm and Wabash is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and Wabash National go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and Wabash National
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to generate 1.88 times more return on investment than Wabash National. However, Hydrofarm Holdings is 1.88 times more volatile than Wabash National. It trades about -0.01 of its potential returns per unit of risk. Wabash National is currently generating about -0.08 per unit of risk. If you would invest 93.00 in Hydrofarm Holdings Group on November 3, 2024 and sell it today you would lose (28.00) from holding Hydrofarm Holdings Group or give up 30.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydrofarm Holdings Group vs. Wabash National
Performance |
| Timeline |
| Hydrofarm Holdings |
| Wabash National |
Hydrofarm Holdings and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydrofarm Holdings and Wabash National
The main advantage of trading using opposite Hydrofarm Holdings and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National'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 |
| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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