Correlation Between Hydrofarm Holdings and CNHI Old

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

By analyzing existing cross correlation between Hydrofarm Holdings Group and CNHI Old, you can compare the effects of market volatilities on Hydrofarm Holdings and CNHI Old 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 Holdings with a short position of CNHI Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and CNHI Old.

Diversification Opportunities for Hydrofarm Holdings and CNHI Old

0.0

Correlation Coefficient

Hydrofarm Holdings  CNHI Old

Pay attention - limited upside

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

Pair Corralation between Hydrofarm Holdings and CNHI Old

If you would invest (100.00) in CNHI Old on December 20, 2024 and sell it today you would earn a total of  100.00  from holding CNHI Old or generate -100.0% return on investment over 90 days.

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

Hydrofarm Holdings Group  vs.  CNHI Old

Hydrofarm Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hydrofarm Holdings Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CNHI Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNHI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, CNHI Old is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hydrofarm Holdings and CNHI Old

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

The idea behind Hydrofarm Holdings Group and CNHI Old 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.