Correlation Between Wabash National and Hydrofarm Holdings
Can any of the company-specific risk be diversified away by investing in both Wabash National 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 Wabash National and Hydrofarm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Hydrofarm Holdings Group, you can compare the effects of market volatilities on Wabash National 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 Wabash National with a short position of Hydrofarm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Hydrofarm Holdings.
Diversification Opportunities for Wabash National and Hydrofarm Holdings
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wabash and Hydrofarm is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Hydrofarm Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrofarm Holdings and Wabash National 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 Wabash National 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 Wabash National i.e., Wabash National and Hydrofarm Holdings go up and down completely randomly.
Pair Corralation between Wabash National and Hydrofarm Holdings
Considering the 90-day investment horizon Wabash National is expected to generate 0.45 times more return on investment than Hydrofarm Holdings. However, Wabash National is 2.23 times less risky than Hydrofarm Holdings. It trades about -0.07 of its potential returns per unit of risk. Hydrofarm Holdings Group is currently generating about -0.06 per unit of risk. If you would invest 1,668 in Wabash National on October 23, 2024 and sell it today you would lose (45.00) from holding Wabash National or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wabash National vs. Hydrofarm Holdings Group
Performance |
| Timeline |
| Wabash National |
| Hydrofarm Holdings |
Wabash National and Hydrofarm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and Hydrofarm Holdings
The main advantage of trading using opposite Wabash National and Hydrofarm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National 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.| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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