Correlation Between Hims Hers and Colgate Palmolive

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

By analyzing existing cross correlation between Hims Hers Health and Colgate Palmolive, you can compare the effects of market volatilities on Hims Hers and Colgate Palmolive 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 Hims Hers with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hims Hers and Colgate Palmolive.

Diversification Opportunities for Hims Hers and Colgate Palmolive

-0.22

Correlation Coefficient

Hims Hers  Colgate Palmolive

Very good diversification

The 3 months correlation between Hims and Colgate is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hims Hers Health and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and Hims Hers 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 Hims Hers Health are associated (or correlated) with Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Hims Hers i.e., Hims Hers and Colgate Palmolive go up and down completely randomly.

Pair Corralation between Hims Hers and Colgate Palmolive

Given the investment horizon of 90 days Hims Hers Health is expected to generate 5.06 times more return on investment than Colgate Palmolive. However, Hims Hers is 5.06 times more volatile than Colgate Palmolive. It trades about 0.09 of its potential returns per unit of risk. Colgate Palmolive is currently generating about 0.04 per unit of risk. If you would invest  2,517  in Hims Hers Health on December 29, 2024 and sell it today you would earn a total of  675.00  from holding Hims Hers Health or generate 26.82% return on investment over 90 days.

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

Hims Hers Health  vs.  Colgate Palmolive

Hims Hers Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hims Hers Health are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Hims Hers unveiled solid returns over the last few months and may actually be approaching a breakup point.

Colgate Palmolive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Colgate Palmolive are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Colgate Palmolive is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hims Hers and Colgate Palmolive

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

The idea behind Hims Hers Health and Colgate Palmolive 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.