Correlation Between Hims Hers and ELF Beauty
Can any of the company-specific risk be diversified away by investing in both Hims Hers and ELF Beauty 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 Hims Hers and ELF Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hims Hers Health and ELF Beauty, you can compare the effects of market volatilities on Hims Hers and ELF Beauty 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 Hims Hers with a short position of ELF Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hims Hers and ELF Beauty.
Diversification Opportunities for Hims Hers and ELF Beauty
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hims and ELF is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hims Hers Health and ELF Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELF Beauty and Hims Hers 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 Hims Hers Health are associated (or correlated) with ELF Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELF Beauty has no effect on the direction of Hims Hers i.e., Hims Hers and ELF Beauty go up and down completely randomly.
Pair Corralation between Hims Hers and ELF Beauty
Given the investment horizon of 90 days Hims Hers Health is expected to generate 2.2 times more return on investment than ELF Beauty. However, Hims Hers is 2.2 times more volatile than ELF Beauty. It trades about 0.09 of its potential returns per unit of risk. ELF Beauty is currently generating about 0.17 per unit of risk. If you would invest 2,308 in Hims Hers Health on August 27, 2024 and sell it today you would earn a total of 225.00 from holding Hims Hers Health or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hims Hers Health vs. ELF Beauty
Performance |
| Timeline |
| Hims Hers Health |
| ELF Beauty |
Hims Hers and ELF Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hims Hers and ELF Beauty
The main advantage of trading using opposite Hims Hers and ELF Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hims Hers position performs unexpectedly, ELF Beauty 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 ELF Beauty will offset losses from the drop in ELF Beauty's long position.| Hims Hers vs. ELF Beauty | Hims Hers vs. Newell Brands | Hims Hers vs. Virgin Group Acquisition | Hims Hers vs. Estee Lauder Companies |
| ELF Beauty vs. Procter Gamble | ELF Beauty vs. Colgate Palmolive | ELF Beauty vs. Coty Inc | ELF Beauty vs. Kenvue 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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