Correlation Between Kenvue and Beauty Health
Can any of the company-specific risk be diversified away by investing in both Kenvue and Beauty Health 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 Kenvue and Beauty Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenvue Inc and Beauty Health Co, you can compare the effects of market volatilities on Kenvue and Beauty Health 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 Kenvue with a short position of Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenvue and Beauty Health.
Diversification Opportunities for Kenvue and Beauty Health
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kenvue and Beauty is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kenvue Inc and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health and Kenvue 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 Kenvue Inc are associated (or correlated) with Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of Kenvue i.e., Kenvue and Beauty Health go up and down completely randomly.
Pair Corralation between Kenvue and Beauty Health
Given the investment horizon of 90 days Kenvue Inc is expected to under-perform the Beauty Health. But the stock apears to be less risky and, when comparing its historical volatility, Kenvue Inc is 4.38 times less risky than Beauty Health. The stock trades about 0.0 of its potential returns per unit of risk. The Beauty Health Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 171.00 in Beauty Health Co on November 2, 2024 and sell it today you would lose (6.00) from holding Beauty Health Co or give up 3.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenvue Inc vs. Beauty Health Co
Performance |
| Timeline |
| Kenvue Inc |
| Beauty Health |
Kenvue and Beauty Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenvue and Beauty Health
The main advantage of trading using opposite Kenvue and Beauty Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenvue position performs unexpectedly, Beauty Health 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 Beauty Health will offset losses from the drop in Beauty Health's long position.| Kenvue vs. Sun Country Airlines | Kenvue vs. Ryanair Holdings PLC | Kenvue vs. Lion One Metals | Kenvue vs. Lindblad Expeditions Holdings |
| Beauty Health vs. Clear Secure | Beauty Health vs. GXO Logistics | Beauty Health vs. Doximity | Beauty Health vs. Figs 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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