Correlation Between Arhaus and GrowGeneration Corp

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

By analyzing existing cross correlation between Arhaus Inc and GrowGeneration Corp, you can compare the effects of market volatilities on Arhaus and GrowGeneration Corp 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 Arhaus with a short position of GrowGeneration Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and GrowGeneration Corp.

Diversification Opportunities for Arhaus and GrowGeneration Corp

-0.19

Correlation Coefficient

Arhaus  GrowGeneration Corp

Good diversification

The 3 months correlation between Arhaus and GrowGeneration is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and GrowGeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrowGeneration Corp and Arhaus 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 Arhaus Inc are associated (or correlated) with GrowGeneration Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrowGeneration Corp has no effect on the direction of Arhaus i.e., Arhaus and GrowGeneration Corp go up and down completely randomly.

Pair Corralation between Arhaus and GrowGeneration Corp

Given the investment horizon of 90 days Arhaus Inc is expected to under-perform the GrowGeneration Corp. But the stock apears to be less risky and, when comparing its historical volatility, Arhaus Inc is 1.22 times less risky than GrowGeneration Corp. The stock trades about -0.05 of its potential returns per unit of risk. The GrowGeneration Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  205.00  in GrowGeneration Corp on October 7, 2024 and sell it today you would lose (23.00) from holding GrowGeneration Corp or give up 11.22% of portfolio value over 90 days.

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

Arhaus Inc  vs.  GrowGeneration Corp

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GrowGeneration Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GrowGeneration Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Arhaus and GrowGeneration Corp

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

The idea behind Arhaus Inc and GrowGeneration Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.