Correlation Between Honest and Intel

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

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

Diversification Opportunities for Honest and Intel

0.48

Correlation Coefficient

Honest  Intel

Very weak diversification

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

Pair Corralation between Honest and Intel

Given the investment horizon of 90 days Honest Company is expected to generate 1.32 times more return on investment than Intel. However, Honest is 1.32 times more volatile than Intel. It trades about -0.27 of its potential returns per unit of risk. Intel is currently generating about -0.36 per unit of risk. If you would invest  467.00  in Honest Company on February 9, 2024 and sell it today you would lose (154.00) from holding Honest Company or give up 32.98% of portfolio value over 90 days.

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

Honest Company  vs.  Intel

Honest Company

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Honest and Intel

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

The idea behind Honest Company and Intel 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.