Correlation Between Beiersdorf and Honest
Can any of the company-specific risk be diversified away by investing in both Beiersdorf and Honest 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 Beiersdorf and Honest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beiersdorf AG ADR and Honest Company, you can compare the effects of market volatilities on Beiersdorf and Honest 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 Beiersdorf with a short position of Honest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beiersdorf and Honest.
Diversification Opportunities for Beiersdorf and Honest
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Beiersdorf and Honest is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Beiersdorf AG ADR and Honest Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honest Company and Beiersdorf 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 Beiersdorf AG ADR are associated (or correlated) with Honest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honest Company has no effect on the direction of Beiersdorf i.e., Beiersdorf and Honest go up and down completely randomly.
Pair Corralation between Beiersdorf and Honest
Assuming the 90 days horizon Beiersdorf AG ADR is expected to generate 0.37 times more return on investment than Honest. However, Beiersdorf AG ADR is 2.67 times less risky than Honest. It trades about 0.15 of its potential returns per unit of risk. Honest Company is currently generating about -0.04 per unit of risk. If you would invest 2,547 in Beiersdorf AG ADR on November 7, 2024 and sell it today you would earn a total of 100.00 from holding Beiersdorf AG ADR or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Beiersdorf AG ADR vs. Honest Company
Performance |
| Timeline |
| Beiersdorf AG ADR |
| Honest Company |
Beiersdorf and Honest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beiersdorf and Honest
The main advantage of trading using opposite Beiersdorf and Honest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beiersdorf position performs unexpectedly, Honest 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 Honest will offset losses from the drop in Honest's long position.| Beiersdorf vs. Kao Corp ADR | Beiersdorf vs. Henkel AG Co | Beiersdorf vs. Henkel Ag A | Beiersdorf vs. Carlsberg AS |
| Honest vs. Estee Lauder Companies | Honest vs. Hims Hers Health | Honest vs. Procter Gamble | Honest vs. Coty Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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