Correlation Between Honest and Hims Hers
Can any of the company-specific risk be diversified away by investing in both Honest and Hims Hers 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 Hims Hers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honest Company and Hims Hers Health, you can compare the effects of market volatilities on Honest and Hims Hers 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 Hims Hers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and Hims Hers.
Diversification Opportunities for Honest and Hims Hers
Weak diversification
The 3 months correlation between Honest and Hims is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and Hims Hers Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hims Hers Health 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 Hims Hers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hims Hers Health has no effect on the direction of Honest i.e., Honest and Hims Hers go up and down completely randomly.
Pair Corralation between Honest and Hims Hers
Given the investment horizon of 90 days Honest Company is expected to generate 0.55 times more return on investment than Hims Hers. However, Honest Company is 1.83 times less risky than Hims Hers. It trades about 0.69 of its potential returns per unit of risk. Hims Hers Health is currently generating about 0.19 per unit of risk. 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 |
Honest Company vs. Hims Hers Health
Performance |
| Timeline |
| Honest Company |
| Hims Hers Health |
Honest and Hims Hers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honest and Hims Hers
The main advantage of trading using opposite Honest and Hims Hers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honest position performs unexpectedly, Hims Hers 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 Hims Hers will offset losses from the drop in Hims Hers' long position.| Honest vs. Estee Lauder Companies | Honest vs. Hims Hers Health | Honest vs. Procter Gamble | Honest vs. Coty Inc |
| Hims Hers vs. ELF Beauty | Hims Hers vs. Newell Brands | Hims Hers vs. Virgin Group Acquisition | Hims Hers vs. Estee Lauder Companies |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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