Correlation Between Hydrofarm Holdings and First Tractor
Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and First Tractor 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 First Tractor 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 First Tractor, you can compare the effects of market volatilities on Hydrofarm Holdings and First Tractor 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 First Tractor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and First Tractor.
Diversification Opportunities for Hydrofarm Holdings and First Tractor
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hydrofarm and First is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hydrofarm Holdings Group and First Tractor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tractor 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 First Tractor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tractor has no effect on the direction of Hydrofarm Holdings i.e., Hydrofarm Holdings and First Tractor go up and down completely randomly.
Pair Corralation between Hydrofarm Holdings and First Tractor
Given the investment horizon of 90 days Hydrofarm Holdings Group is expected to under-perform the First Tractor. In addition to that, Hydrofarm Holdings is 1.45 times more volatile than First Tractor. It trades about -0.03 of its total potential returns per unit of risk. First Tractor is currently generating about 0.06 per unit of volatility. If you would invest 44.00 in First Tractor on December 7, 2024 and sell it today you would earn a total of 37.00 from holding First Tractor or generate 84.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 66.33% |
Values | Daily Returns |
Hydrofarm Holdings Group vs. First Tractor
Performance |
Timeline |
Hydrofarm Holdings |
First Tractor |
Hydrofarm Holdings and First Tractor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hydrofarm Holdings and First Tractor
The main advantage of trading using opposite Hydrofarm Holdings and First Tractor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydrofarm Holdings position performs unexpectedly, First Tractor 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 First Tractor will offset losses from the drop in First Tractor's long position.Hydrofarm Holdings vs. Gencor Industries | Hydrofarm Holdings vs. CEA Industries | Hydrofarm Holdings vs. Arts Way Manufacturing Co | Hydrofarm Holdings vs. CubicFarm Systems Corp |
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Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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