Correlation Between Titan International and Hydrofarm Holdings
Can any of the company-specific risk be diversified away by investing in both Titan International and Hydrofarm Holdings 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 Titan International and Hydrofarm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan International and Hydrofarm Holdings Group, you can compare the effects of market volatilities on Titan International and Hydrofarm Holdings 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 Titan International with a short position of Hydrofarm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan International and Hydrofarm Holdings.
Diversification Opportunities for Titan International and Hydrofarm Holdings
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Titan and Hydrofarm is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Titan International and Hydrofarm Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrofarm Holdings and Titan International 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 Titan International are associated (or correlated) with Hydrofarm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrofarm Holdings has no effect on the direction of Titan International i.e., Titan International and Hydrofarm Holdings go up and down completely randomly.
Pair Corralation between Titan International and Hydrofarm Holdings
Considering the 90-day investment horizon Titan International is expected to under-perform the Hydrofarm Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Titan International is 1.95 times less risky than Hydrofarm Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Hydrofarm Holdings Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. 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 |
Titan International vs. Hydrofarm Holdings Group
Performance |
| Timeline |
| Titan International |
| Hydrofarm Holdings |
Titan International and Hydrofarm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan International and Hydrofarm Holdings
The main advantage of trading using opposite Titan International and Hydrofarm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan International position performs unexpectedly, Hydrofarm Holdings 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 Hydrofarm Holdings will offset losses from the drop in Hydrofarm Holdings' long position.| Titan International vs. Shyft Group | Titan International vs. Manitowoc | Titan International vs. Oshkosh | Titan International vs. Terex |
| Hydrofarm Holdings vs. Gencor Industries | Hydrofarm Holdings vs. CEA Industries | Hydrofarm Holdings vs. Arts Way Manufacturing Co | Hydrofarm Holdings vs. CubicFarm Systems Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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