Correlation Between Kenvue and Hims Hers

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

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

Diversification Opportunities for Kenvue and Hims Hers

0.48

Correlation Coefficient

Kenvue  Hims Hers

Very weak diversification

The 3 months correlation between Kenvue and Hims is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kenvue Inc and Hims Hers Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hims Hers 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 Hims Hers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hims Hers Health has no effect on the direction of Kenvue i.e., Kenvue and Hims Hers go up and down completely randomly.

Pair Corralation between Kenvue and Hims Hers

Given the investment horizon of 90 days Kenvue is expected to generate 9.74 times less return on investment than Hims Hers. But when comparing it to its historical volatility, Kenvue Inc is 5.74 times less risky than Hims Hers. It trades about 0.12 of its potential returns per unit of risk. Hims Hers Health is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Hims Hers Health on September 1, 2024 and sell it today you would earn a total of  1,772  from holding Hims Hers Health or generate 122.21% return on investment over 90 days.

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

Kenvue Inc  vs.  Hims Hers Health

Kenvue Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kenvue Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Kenvue may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hims Hers Health

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hims Hers Health are ranked lower than 16 (%) 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.

Pair Trading with Kenvue and Hims Hers

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

The idea behind Kenvue Inc and Hims Hers Health 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.