Correlation Between HYDROFARM HLD and Henry Schein

Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and Henry Schein 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 HLD and Henry Schein into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HYDROFARM HLD GRP and Henry Schein, you can compare the effects of market volatilities on HYDROFARM HLD and Henry Schein 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 HLD with a short position of Henry Schein. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and Henry Schein.

Diversification Opportunities for HYDROFARM HLD and Henry Schein

0.62

Correlation Coefficient

HYDROFARM HLD  Henry Schein

Poor diversification

The 3 months correlation between HYDROFARM and Henry is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Henry Schein in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henry Schein and HYDROFARM HLD 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 HLD GRP are associated (or correlated) with Henry Schein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henry Schein has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and Henry Schein go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and Henry Schein

Assuming the 90 days trading horizon HYDROFARM HLD is expected to generate 1.31 times less return on investment than Henry Schein. In addition to that, HYDROFARM HLD is 2.18 times more volatile than Henry Schein. It trades about 0.04 of its total potential returns per unit of risk. Henry Schein is currently generating about 0.12 per unit of volatility. If you would invest  6,310  in Henry Schein on September 15, 2024 and sell it today you would earn a total of  946.00  from holding Henry Schein or generate 14.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

HYDROFARM HLD GRP  vs.  Henry Schein

HYDROFARM HLD GRP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HYDROFARM HLD GRP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HYDROFARM HLD may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Henry Schein

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Henry Schein are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Henry Schein reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HYDROFARM HLD and Henry Schein

The main advantage of trading using opposite HYDROFARM HLD and Henry Schein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYDROFARM HLD position performs unexpectedly, Henry Schein 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 Henry Schein will offset losses from the drop in Henry Schein's long position.

The idea behind HYDROFARM HLD GRP and Henry Schein 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.

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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.