Stubbs returned to his former club yesterday to make the Scotland under-21 internationalist his fifth summer recruit. Hibs are hoping they will receive international clearance in time for the 19-year-old to make his debut in today's SPFL Championship curtain raiser at home to Livingston.
Kennedy left Kilmarnock for Everton two years ago and has featured in the Barclays Premier League club's under-21 side, which was previously managed by Stubbs, as well as being farmed out to Tranmere Rovers and MK Dons.
Kennedy said: "I'm really excited about being here - Hibernian are a massive club and I'm looking forward to working with Alan Stubbs again. He was my manager with the under-21s at Everton and I've always enjoyed working with him, so everything about this loan move made sense.
"I'm looking to play as regularly as possible and to help Hibernian climb back up into the Premiership. I trained for the first time on Friday, but I feel like I've settled in really quickly and I already know some of the players here. I've played with Danny [Handling] and Sam [Stanton] with Scotland under-21s and I played with Heff [Paul Heffernan] and Michael [Nelson] at Kilmarnock.
"This is a new challenge for me and I'm determined to make the most of it by being part of a successful team."
Stubbs, who has already signed David Gray, Farid El Alagui, Scott Allan and Mark Oxley, said: "Matthew is a player with huge potential and he will be a great addition to our squad. His arrival emboldens what I've consistently said throughout the summer transfer window - we want to bring quality players here to Hibernian.
"I'm delighted to sign someone, who I have worked with over the past couple of years - he knows exactly what I want and I know what he is capable of. I would like to thank Everton for allowing me to take one of their talented young players on a six-month loan and believe Hibernian will be a great platform for him to continue his development and to fulfil his potential."
All is not quite so rosy for today's opponents. Livingston have been hit with several Scottish Football Association charges relating to key shareholder Neil Rankine.
The West Lothian side have been accused of failing to disclose that Rankine, described by the SFA as shareholder of parent company Livingston 5 Ltd, also holds interests in Championship rivals Dumbarton along with East Fife.
Charges include failure to act in good faith to the SFA; providing false, misleading and/or inaccurate information on their official return; failing to specify Ranine on official returns; not acting in the best interests of football by their non-disclosure of Rankine's other interests; and of holding power to influence the management or administration of two other clubs.
The SFA statement added: "Please note that neither East Fife nor Dumbarton are under investigation and there is no suggestion of improper conduct on their part at this stage."
A hearing date has been pencilled in for September 10.