Correlation Between Hydrofarm Holdings and Leafly Holdings

Can any of the company-specific risk be diversified away by investing in both Hydrofarm Holdings and Leafly 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 Hydrofarm Holdings and Leafly Holdings 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 Leafly Holdings, you can compare the effects of market volatilities on Hydrofarm Holdings and Leafly 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 Hydrofarm Holdings with a short position of Leafly Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydrofarm Holdings and Leafly Holdings.

Diversification Opportunities for Hydrofarm Holdings and Leafly Holdings

0.0

Correlation Coefficient

Hydrofarm Holdings  Leafly Holdings

Pay attention - limited upside

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

Pair Corralation between Hydrofarm Holdings and Leafly Holdings

If you would invest  422.00  in Hydrofarm Holdings Group on May 7, 2025 and sell it today you would earn a total of  13.00  from holding Hydrofarm Holdings Group or generate 3.08% 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.  Leafly Holdings

Hydrofarm Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hydrofarm Holdings Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Hydrofarm Holdings may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Leafly Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leafly Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Leafly Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hydrofarm Holdings and Leafly Holdings

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

The idea behind Hydrofarm Holdings Group and Leafly Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.