Correlation Between HYDROFARM HLD and Trupanion

Can any of the company-specific risk be diversified away by investing in both HYDROFARM HLD and Trupanion 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 Trupanion 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 Trupanion, you can compare the effects of market volatilities on HYDROFARM HLD and Trupanion 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 Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYDROFARM HLD and Trupanion.

Diversification Opportunities for HYDROFARM HLD and Trupanion

0.22

Correlation Coefficient

HYDROFARM HLD  Trupanion

Modest diversification

The 3 months correlation between HYDROFARM and Trupanion is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and Trupanion go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and Trupanion

Assuming the 90 days trading horizon HYDROFARM HLD GRP is expected to under-perform the Trupanion. In addition to that, HYDROFARM HLD is 1.8 times more volatile than Trupanion. It trades about 0.0 of its total potential returns per unit of risk. Trupanion is currently generating about 0.07 per unit of volatility. If you would invest  4,223  in Trupanion on October 10, 2024 and sell it today you would earn a total of  421.00  from holding Trupanion or generate 9.97% return on investment over 90 days.

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

HYDROFARM HLD GRP  vs.  Trupanion

HYDROFARM HLD GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HYDROFARM HLD GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HYDROFARM HLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Trupanion

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trupanion are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Trupanion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HYDROFARM HLD and Trupanion

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

The idea behind HYDROFARM HLD GRP and Trupanion 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.