Correlation Between ASOS Plc and Etsy
Can any of the company-specific risk be diversified away by investing in both ASOS Plc and Etsy 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 ASOS Plc and Etsy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASOS Plc and Etsy Inc, you can compare the effects of market volatilities on ASOS Plc and Etsy 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 ASOS Plc with a short position of Etsy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS Plc and Etsy.
Diversification Opportunities for ASOS Plc and Etsy
Pay attention - limited upside
The 3 months correlation between ASOS and Etsy is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ASOS Plc and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc and ASOS Plc 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 ASOS Plc are associated (or correlated) with Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of ASOS Plc i.e., ASOS Plc and Etsy go up and down completely randomly.
Pair Corralation between ASOS Plc and Etsy
Assuming the 90 days horizon ASOS Plc is expected to generate 0.87 times more return on investment than Etsy. However, ASOS Plc is 1.15 times less risky than Etsy. It trades about 0.13 of its potential returns per unit of risk. Etsy Inc is currently generating about -0.02 per unit of risk. If you would invest 465.00 in ASOS Plc on August 25, 2024 and sell it today you would earn a total of 76.00 from holding ASOS Plc or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASOS Plc vs. Etsy Inc
Performance |
| Timeline |
| ASOS Plc |
| Etsy Inc |
ASOS Plc and Etsy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASOS Plc and Etsy
The main advantage of trading using opposite ASOS Plc and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASOS Plc position performs unexpectedly, Etsy 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 Etsy will offset losses from the drop in Etsy's long position.| ASOS Plc vs. BoohooCom PLC ADR | ASOS Plc vs. Allegroeu SA | ASOS Plc vs. ZALANDO SE ADR | ASOS Plc vs. AKA Brands Holding |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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