Correlation Between Honest and Virgin Group
Can any of the company-specific risk be diversified away by investing in both Honest and Virgin Group 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 Honest and Virgin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honest Company and Virgin Group Acquisition, you can compare the effects of market volatilities on Honest and Virgin Group 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 Honest with a short position of Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and Virgin Group.
Diversification Opportunities for Honest and Virgin Group
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Honest and Virgin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition and Honest 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 Honest Company are associated (or correlated) with Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of Honest i.e., Honest and Virgin Group go up and down completely randomly.
Pair Corralation between Honest and Virgin Group
Given the investment horizon of 90 days Honest Company is expected to generate 1.0 times more return on investment than Virgin Group. However, Honest is 1.0 times more volatile than Virgin Group Acquisition. It trades about 0.11 of its potential returns per unit of risk. Virgin Group Acquisition is currently generating about 0.04 per unit of risk. If you would invest 430.00 in Honest Company on November 2, 2024 and sell it today you would earn a total of 198.00 from holding Honest Company or generate 46.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honest Company vs. Virgin Group Acquisition
Performance |
| Timeline |
| Honest Company |
| Virgin Group Acquisition |
Honest and Virgin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honest and Virgin Group
The main advantage of trading using opposite Honest and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honest position performs unexpectedly, Virgin Group 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 Virgin Group will offset losses from the drop in Virgin Group's long position.| Honest vs. Estee Lauder Companies | Honest vs. Hims Hers Health | Honest vs. Procter Gamble | Honest vs. Coty Inc |
| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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