Correlation Between Honest and Henkel AG
Can any of the company-specific risk be diversified away by investing in both Honest and Henkel AG 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 Henkel AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honest Company and Henkel AG Co, you can compare the effects of market volatilities on Honest and Henkel AG 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 Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and Henkel AG.
Diversification Opportunities for Honest and Henkel AG
Very good diversification
The 3 months correlation between Honest and Henkel is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG 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 Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of Honest i.e., Honest and Henkel AG go up and down completely randomly.
Pair Corralation between Honest and Henkel AG
Given the investment horizon of 90 days Honest Company is expected to under-perform the Henkel AG. In addition to that, Honest is 3.53 times more volatile than Henkel AG Co. It trades about -0.04 of its total potential returns per unit of risk. Henkel AG Co is currently generating about 0.07 per unit of volatility. If you would invest 1,891 in Henkel AG Co on November 7, 2024 and sell it today you would earn a total of 26.00 from holding Henkel AG Co or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Honest Company vs. Henkel AG Co
Performance |
| Timeline |
| Honest Company |
| Henkel AG |
Honest and Henkel AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honest and Henkel AG
The main advantage of trading using opposite Honest and Henkel AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honest position performs unexpectedly, Henkel AG 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 Henkel AG will offset losses from the drop in Henkel AG's long position.| Honest vs. Estee Lauder Companies | Honest vs. Hims Hers Health | Honest vs. Procter Gamble | Honest vs. Coty Inc |
| Henkel AG vs. Essity AB | Henkel AG vs. Hengan International Group | Henkel AG vs. LOral SA | Henkel AG vs. Beiersdorf AG ADR |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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