Correlation Between Kenvue and Inter Parfums

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

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

Diversification Opportunities for Kenvue and Inter Parfums

0.47

Correlation Coefficient

Kenvue  Inter Parfums

Very weak diversification

The 3 months correlation between Kenvue and Inter is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kenvue Inc and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums 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 Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Kenvue i.e., Kenvue and Inter Parfums go up and down completely randomly.

Pair Corralation between Kenvue and Inter Parfums

Given the investment horizon of 90 days Kenvue Inc is expected to under-perform the Inter Parfums. But the stock apears to be less risky and, when comparing its historical volatility, Kenvue Inc is 1.25 times less risky than Inter Parfums. The stock trades about -0.04 of its potential returns per unit of risk. The Inter Parfums is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  11,913  in Inter Parfums on September 14, 2024 and sell it today you would earn a total of  1,841  from holding Inter Parfums or generate 15.45% 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.  Inter Parfums

Kenvue Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenvue Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kenvue is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Inter Parfums

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Parfums are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Inter Parfums reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kenvue and Inter Parfums

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

The idea behind Kenvue Inc and Inter Parfums 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.