Correlation Between HYDROFARM HLD and Walgreens Boots

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

Diversification Opportunities for HYDROFARM HLD and Walgreens Boots

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Correlation Coefficient

HYDROFARM HLD  Walgreens Boots

Pay attention - limited upside

The 3 months correlation between HYDROFARM and Walgreens is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HYDROFARM HLD GRP and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance 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 Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of HYDROFARM HLD i.e., HYDROFARM HLD and Walgreens Boots go up and down completely randomly.

Pair Corralation between HYDROFARM HLD and Walgreens Boots

If you would invest  747.00  in HYDROFARM HLD GRP on December 2, 2024 and sell it today you would lose (217.00) from holding HYDROFARM HLD GRP or give up 29.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

HYDROFARM HLD GRP  vs.  Walgreens Boots Alliance

HYDROFARM HLD GRP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYDROFARM HLD GRP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HYDROFARM HLD reported solid returns over the last few months and may actually be approaching a breakup point.

Walgreens Boots Alliance

Risk-Adjusted Performance

OK

Over the last 90 days Walgreens Boots Alliance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Walgreens Boots is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HYDROFARM HLD and Walgreens Boots

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

The idea behind HYDROFARM HLD GRP and Walgreens Boots Alliance 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.