Correlation Between Honest and PROVIDENCE

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

By analyzing existing cross correlation between Honest Company and PROVIDENCE HEALTH SVCS, you can compare the effects of market volatilities on Honest and PROVIDENCE 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 PROVIDENCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and PROVIDENCE.

Diversification Opportunities for Honest and PROVIDENCE

-0.21

Correlation Coefficient

Honest  PROVIDENCE

Very good diversification

The 3 months correlation between Honest and PROVIDENCE is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and PROVIDENCE HEALTH SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROVIDENCE HEALTH SVCS 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 PROVIDENCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROVIDENCE HEALTH SVCS has no effect on the direction of Honest i.e., Honest and PROVIDENCE go up and down completely randomly.

Pair Corralation between Honest and PROVIDENCE

Given the investment horizon of 90 days Honest Company is expected to under-perform the PROVIDENCE. In addition to that, Honest is 4.23 times more volatile than PROVIDENCE HEALTH SVCS. It trades about -0.14 of its total potential returns per unit of risk. PROVIDENCE HEALTH SVCS is currently generating about 0.07 per unit of volatility. If you would invest  7,584  in PROVIDENCE HEALTH SVCS on December 26, 2024 and sell it today you would earn a total of  23.00  from holding PROVIDENCE HEALTH SVCS or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	8.33%
Values	Daily Returns

Honest Company  vs.  PROVIDENCE HEALTH SVCS

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PROVIDENCE HEALTH SVCS

Risk-Adjusted Performance

Modest

Over the last 90 days PROVIDENCE HEALTH SVCS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PROVIDENCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Honest and PROVIDENCE

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

The idea behind Honest Company and PROVIDENCE HEALTH SVCS 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.