Correlation Between Inter Parfums and Honest

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

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

Diversification Opportunities for Inter Parfums and Honest

0.85

Correlation Coefficient

Inter Parfums  Honest

Very poor diversification

The 3 months correlation between Inter and Honest is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Honest Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honest Company and Inter Parfums 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 Inter Parfums 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 Inter Parfums i.e., Inter Parfums and Honest go up and down completely randomly.

Pair Corralation between Inter Parfums and Honest

Given the investment horizon of 90 days Inter Parfums is expected to under-perform the Honest. But the stock apears to be less risky and, when comparing its historical volatility, Inter Parfums is 1.58 times less risky than Honest. The stock trades about -0.11 of its potential returns per unit of risk. The Honest Company is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  616.00  in Honest Company on February 3, 2025 and sell it today you would lose (117.00) from holding Honest Company or give up 18.99% of portfolio value over 90 days.

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

Inter Parfums  vs.  Honest Company

Inter Parfums

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inter Parfums has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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

Pair Trading with Inter Parfums and Honest

The main advantage of trading using opposite Inter Parfums and Honest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums 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 Inter Parfums 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.