Correlation Between Ethan Allen and Nova Lifestyle
Can any of the company-specific risk be diversified away by investing in both Ethan Allen and Nova Lifestyle 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 Nova Lifestyle 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 Nova Lifestyle I, you can compare the effects of market volatilities on Ethan Allen and Nova Lifestyle 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 Nova Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethan Allen and Nova Lifestyle.
Diversification Opportunities for Ethan Allen and Nova Lifestyle
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ethan and Nova is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ethan Allen Interiors and Nova Lifestyle I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Lifestyle I 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 Nova Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Lifestyle I has no effect on the direction of Ethan Allen i.e., Ethan Allen and Nova Lifestyle go up and down completely randomly.
Pair Corralation between Ethan Allen and Nova Lifestyle
Considering the 90-day investment horizon Ethan Allen is expected to generate 3.96 times less return on investment than Nova Lifestyle. But when comparing it to its historical volatility, Ethan Allen Interiors is 7.24 times less risky than Nova Lifestyle. It trades about 0.01 of its potential returns per unit of risk. Nova Lifestyle I is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 169.00 in Nova Lifestyle I on September 14, 2024 and sell it today you would lose (124.00) from holding Nova Lifestyle I or give up 73.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ethan Allen Interiors vs. Nova Lifestyle I
Performance |
| Timeline |
| Ethan Allen Interiors |
| Nova Lifestyle I |
Ethan Allen and Nova Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethan Allen and Nova Lifestyle
The main advantage of trading using opposite Ethan Allen and Nova Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethan Allen position performs unexpectedly, Nova Lifestyle 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 Nova Lifestyle will offset losses from the drop in Nova Lifestyle's long position.| Ethan Allen vs. Natuzzi SpA | Ethan Allen vs. Flexsteel Industries | Ethan Allen vs. Hamilton Beach Brands | Ethan Allen vs. La Z Boy Incorporated |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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