Correlation Between Hims Hers and Honest
Can any of the company-specific risk be diversified away by investing in both Hims Hers 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 Hims Hers and Honest 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 Honest Company, you can compare the effects of market volatilities on Hims Hers 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 Hims Hers with a short position of Honest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hims Hers and Honest.
Diversification Opportunities for Hims Hers and Honest
Weak diversification
The 3 months correlation between Hims and Honest is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hims Hers Health and Honest Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honest Company 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 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 Hims Hers i.e., Hims Hers and Honest go up and down completely randomly.
Pair Corralation between Hims Hers and Honest
Given the investment horizon of 90 days Hims Hers is expected to generate 2.01 times less return on investment than Honest. In addition to that, Hims Hers is 1.83 times more volatile than Honest Company. It trades about 0.19 of its total potential returns per unit of risk. Honest Company is currently generating about 0.69 per unit of volatility. If you would invest 378.00 in Honest Company on August 28, 2024 and sell it today you would earn a total of 479.00 from holding Honest Company or generate 126.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hims Hers Health vs. Honest Company
Performance |
| Timeline |
| Hims Hers Health |
| Honest Company |
Hims Hers and Honest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hims Hers and Honest
The main advantage of trading using opposite Hims Hers and Honest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hims Hers 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.| Hims Hers vs. ELF Beauty | Hims Hers vs. Newell Brands | Hims Hers vs. Virgin Group Acquisition | Hims Hers vs. Estee Lauder Companies |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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