Correlation Between RH and GrowGeneration Corp
Can any of the company-specific risk be diversified away by investing in both RH and GrowGeneration 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 RH and GrowGeneration Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RH and GrowGeneration Corp, you can compare the effects of market volatilities on RH and GrowGeneration 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 RH with a short position of GrowGeneration Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RH and GrowGeneration Corp.
Diversification Opportunities for RH and GrowGeneration Corp
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RH and GrowGeneration is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding RH and GrowGeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrowGeneration Corp and RH 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 RH are associated (or correlated) with GrowGeneration Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrowGeneration Corp has no effect on the direction of RH i.e., RH and GrowGeneration Corp go up and down completely randomly.
Pair Corralation between RH and GrowGeneration Corp
Allowing for the 90-day total investment horizon RH is expected to generate 0.58 times more return on investment than GrowGeneration Corp. However, RH is 1.74 times less risky than GrowGeneration Corp. It trades about 0.41 of its potential returns per unit of risk. GrowGeneration Corp is currently generating about -0.1 per unit of risk. If you would invest 38,802 in RH on October 20, 2024 and sell it today you would earn a total of 5,921 from holding RH or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RH vs. GrowGeneration Corp
Performance |
| Timeline |
| RH |
| GrowGeneration Corp |
RH and GrowGeneration Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RH and GrowGeneration Corp
The main advantage of trading using opposite RH and GrowGeneration Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RH position performs unexpectedly, GrowGeneration 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 GrowGeneration Corp will offset losses from the drop in GrowGeneration Corp's long position.The idea behind RH and GrowGeneration Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GrowGeneration Corp vs. Evgo Inc | GrowGeneration Corp vs. Ulta Beauty | GrowGeneration Corp vs. Best Buy Co | GrowGeneration Corp vs. RH |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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