Correlation Between Navistar International and Hydrofarm Holdings

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

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

Diversification Opportunities for Navistar International and Hydrofarm Holdings

0.0

Correlation Coefficient

Navistar International  Hydrofarm Holdings

Pay attention - limited upside

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

Pair Corralation between Navistar International and Hydrofarm Holdings

If you would invest (100.00) in Navistar International on January 26, 2024 and sell it today you would earn a total of  100.00  from holding Navistar International 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

Navistar International  vs.  Hydrofarm Holdings GroupInc

Navistar International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navistar International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Navistar International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hydrofarm Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hydrofarm Holdings GroupInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Navistar International and Hydrofarm Holdings

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

The idea behind Navistar International and Hydrofarm Holdings GroupInc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.