Correlation Between Honest and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Honest and Inter Parfums 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 Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honest Company and Inter Parfums, you can compare the effects of market volatilities on Honest and Inter Parfums 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 Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and Inter Parfums.
Diversification Opportunities for Honest and Inter Parfums
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Honest and Inter is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums 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 Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Honest i.e., Honest and Inter Parfums go up and down completely randomly.
Pair Corralation between Honest and Inter Parfums
Given the investment horizon of 90 days Honest Company is expected to generate 2.25 times more return on investment than Inter Parfums. However, Honest is 2.25 times more volatile than Inter Parfums. It trades about 0.07 of its potential returns per unit of risk. Inter Parfums is currently generating about 0.04 per unit of risk. If you would invest 282.00 in Honest Company on August 24, 2024 and sell it today you would earn a total of 533.00 from holding Honest Company or generate 189.01% 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. Inter Parfums
Performance |
| Timeline |
| Honest Company |
| Inter Parfums |
Honest and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honest and Inter Parfums
The main advantage of trading using opposite Honest and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honest position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| Honest vs. Estee Lauder Companies | Honest vs. Hims Hers Health | Honest vs. Procter Gamble | Honest vs. Coty Inc |
| Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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