Correlation Between Cimpress and Honest

Can any of the company-specific risk be diversified away by investing in both Cimpress and Honest 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 Cimpress and Honest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cimpress NV and Honest Company, you can compare the effects of market volatilities on Cimpress and Honest 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 Cimpress with a short position of Honest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cimpress and Honest.

Diversification Opportunities for Cimpress and Honest

0.1

Correlation Coefficient

Cimpress  Honest

Average diversification

The 3 months correlation between Cimpress and Honest is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cimpress NV and Honest Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honest Company and Cimpress 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 Cimpress NV are associated (or correlated) with Honest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honest Company has no effect on the direction of Cimpress i.e., Cimpress and Honest go up and down completely randomly.

Pair Corralation between Cimpress and Honest

Given the investment horizon of 90 days Cimpress NV is expected to under-perform the Honest. But the stock apears to be less risky and, when comparing its historical volatility, Cimpress NV is 2.52 times less risky than Honest. The stock trades about -0.17 of its potential returns per unit of risk. The Honest Company is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  486.00  in Honest Company on October 11, 2024 and sell it today you would earn a total of  147.00  from holding Honest Company or generate 30.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cimpress NV  vs.  Honest Company

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Honest Company

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Honest Company are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Honest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cimpress and Honest

The main advantage of trading using opposite Cimpress and Honest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cimpress position performs unexpectedly, Honest 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 Honest will offset losses from the drop in Honest's long position.

The idea behind Cimpress NV and Honest Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.