Correlation Between Seven West and HYDROFARM HLD

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

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

Diversification Opportunities for Seven West and HYDROFARM HLD

-0.35

Correlation Coefficient

Seven West  HYDROFARM HLD

Very good diversification

The 3 months correlation between Seven and HYDROFARM is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media 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 Seven West 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 Seven West Media 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 Seven West i.e., Seven West and HYDROFARM HLD go up and down completely randomly.

Pair Corralation between Seven West and HYDROFARM HLD

Assuming the 90 days horizon Seven West Media is expected to under-perform the HYDROFARM HLD. But the stock apears to be less risky and, when comparing its historical volatility, Seven West Media is 1.42 times less risky than HYDROFARM HLD. The stock trades about -0.08 of its potential returns per unit of risk. The HYDROFARM HLD GRP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  61.00  in HYDROFARM HLD GRP on September 16, 2024 and sell it today you would earn a total of  3.00  from holding HYDROFARM HLD GRP or generate 4.92% return on investment over 90 days.

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

Seven West Media  vs.  HYDROFARM HLD GRP

Seven West Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seven West Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

HYDROFARM HLD GRP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HYDROFARM HLD GRP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HYDROFARM HLD may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Seven West and HYDROFARM HLD

The main advantage of trading using opposite Seven West and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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 Seven West Media 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.