Correlation Between Ford and HYDROFARM HLD

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

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

Diversification Opportunities for Ford and HYDROFARM HLD

0.53

Correlation Coefficient

Ford  HYDROFARM HLD

Very weak diversification

The 3 months correlation between Ford and HYDROFARM is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP and Ford 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 Ford Motor are associated (or correlated) with HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of Ford i.e., Ford and HYDROFARM HLD go up and down completely randomly.

Pair Corralation between Ford and HYDROFARM HLD

Taking into account the 90-day investment horizon Ford is expected to generate 122.07 times less return on investment than HYDROFARM HLD. But when comparing it to its historical volatility, Ford Motor is 58.06 times less risky than HYDROFARM HLD. It trades about 0.05 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  587.00  in HYDROFARM HLD GRP on December 26, 2024 and sell it today you would lose (57.00) from holding HYDROFARM HLD GRP or give up 9.71% of portfolio value over 90 days.

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

Ford Motor  vs.  HYDROFARM HLD GRP

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 9 (%) 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.

Pair Trading with Ford and HYDROFARM HLD

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

The idea behind Ford Motor and HYDROFARM HLD GRP 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 CEOs Directory module to screen CEOs from public companies around the world.