Correlation Between Henkel AG and European Wax
Can any of the company-specific risk be diversified away by investing in both Henkel AG and European Wax 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 Henkel AG and European Wax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henkel AG Co and European Wax Center, you can compare the effects of market volatilities on Henkel AG and European Wax 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 Henkel AG with a short position of European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henkel AG and European Wax.
Diversification Opportunities for Henkel AG and European Wax
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Henkel and European is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Henkel AG Co and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center and Henkel AG 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 Henkel AG Co are associated (or correlated) with European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Henkel AG i.e., Henkel AG and European Wax go up and down completely randomly.
Pair Corralation between Henkel AG and European Wax
Assuming the 90 days horizon Henkel AG Co is expected to generate 0.59 times more return on investment than European Wax. However, Henkel AG Co is 1.7 times less risky than European Wax. It trades about 0.02 of its potential returns per unit of risk. European Wax Center is currently generating about -0.03 per unit of risk. If you would invest 6,689 in Henkel AG Co on August 27, 2024 and sell it today you would earn a total of 450.00 from holding Henkel AG Co or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 63.91% |
| Values | Daily Returns |
Henkel AG Co vs. European Wax Center
Performance |
| Timeline |
| Henkel AG |
| European Wax Center |
Henkel AG and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henkel AG and European Wax
The main advantage of trading using opposite Henkel AG and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henkel AG position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| Henkel AG vs. European Wax Center | Henkel AG vs. Edgewell Personal Care | Henkel AG vs. Inter Parfums | Henkel AG vs. Mannatech Incorporated |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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