Correlation Between Ethan Allen and Crown Crafts
Can any of the company-specific risk be diversified away by investing in both Ethan Allen and Crown Crafts 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 Ethan Allen and Crown Crafts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethan Allen Interiors and Crown Crafts, you can compare the effects of market volatilities on Ethan Allen and Crown Crafts 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 Ethan Allen with a short position of Crown Crafts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethan Allen and Crown Crafts.
Diversification Opportunities for Ethan Allen and Crown Crafts
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ethan and Crown is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ethan Allen Interiors and Crown Crafts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Crafts and Ethan Allen 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 Ethan Allen Interiors are associated (or correlated) with Crown Crafts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Crafts has no effect on the direction of Ethan Allen i.e., Ethan Allen and Crown Crafts go up and down completely randomly.
Pair Corralation between Ethan Allen and Crown Crafts
Considering the 90-day investment horizon Ethan Allen Interiors is expected to generate 1.53 times more return on investment than Crown Crafts. However, Ethan Allen is 1.53 times more volatile than Crown Crafts. It trades about 0.03 of its potential returns per unit of risk. Crown Crafts is currently generating about -0.02 per unit of risk. If you would invest 2,803 in Ethan Allen Interiors on November 2, 2024 and sell it today you would earn a total of 369.00 from holding Ethan Allen Interiors or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethan Allen Interiors vs. Crown Crafts
Performance |
| Timeline |
| Ethan Allen Interiors |
| Crown Crafts |
Ethan Allen and Crown Crafts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethan Allen and Crown Crafts
The main advantage of trading using opposite Ethan Allen and Crown Crafts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethan Allen position performs unexpectedly, Crown Crafts 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 Crown Crafts will offset losses from the drop in Crown Crafts' long position.| Ethan Allen vs. Bassett Furniture Industries | Ethan Allen vs. Natuzzi SpA | Ethan Allen vs. Flexsteel Industries | Ethan Allen vs. Hamilton Beach Brands |
| Crown Crafts vs. Bassett Furniture Industries | Crown Crafts vs. Hooker Furniture | Crown Crafts vs. Natuzzi SpA | Crown Crafts vs. Flexsteel Industries |
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 Stocks Directory module to find actively traded stocks across global markets.
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