Correlation Between Hims Hers and Honest

Can any of the company-specific risk be diversified away by investing in both Hims Hers 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 Hims Hers and Honest 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 Honest Company, you can compare the effects of market volatilities on Hims Hers 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 Hims Hers with a short position of Honest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hims Hers and Honest.

Diversification Opportunities for Hims Hers and Honest

-0.11

Correlation Coefficient

Hims Hers  Honest

Good diversification

The 3 months correlation between Hims and Honest is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hims Hers Health and Honest Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honest Company 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 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 Hims Hers i.e., Hims Hers and Honest go up and down completely randomly.

Pair Corralation between Hims Hers and Honest

Given the investment horizon of 90 days Hims Hers Health is expected to generate 1.85 times more return on investment than Honest. However, Hims Hers is 1.85 times more volatile than Honest Company. It trades about 0.27 of its potential returns per unit of risk. Honest Company is currently generating about -0.06 per unit of risk. If you would invest  2,353  in Hims Hers Health on November 19, 2024 and sell it today you would earn a total of  3,694  from holding Hims Hers Health or generate 156.99% 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.  Honest Company

Hims Hers Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hims Hers Health are ranked lower than 21 (%) 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.

Honest Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Honest Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hims Hers and Honest

The main advantage of trading using opposite Hims Hers and Honest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hims Hers 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 Hims Hers Health 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.