Correlation Between Etsy and Continental
Can any of the company-specific risk be diversified away by investing in both Etsy and Continental 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 Etsy and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etsy Inc and Caleres, you can compare the effects of market volatilities on Etsy and Continental 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 Etsy with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and Continental.
Diversification Opportunities for Etsy and Continental
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Etsy and Continental is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Etsy 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 Etsy Inc are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Etsy i.e., Etsy and Continental go up and down completely randomly.
Pair Corralation between Etsy and Continental
Given the investment horizon of 90 days Etsy Inc is expected to generate 0.73 times more return on investment than Continental. However, Etsy Inc is 1.37 times less risky than Continental. It trades about 0.04 of its potential returns per unit of risk. Caleres is currently generating about -0.18 per unit of risk. If you would invest 5,230 in Etsy Inc on October 31, 2024 and sell it today you would earn a total of 275.00 from holding Etsy Inc or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Etsy Inc vs. Caleres
Performance |
| Timeline |
| Etsy Inc |
| Continental |
Etsy and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etsy and Continental
The main advantage of trading using opposite Etsy and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etsy position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.The idea behind Etsy Inc and Caleres 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.| Continental vs. Vera Bradley | Continental vs. Wolverine World Wide | Continental vs. Rocky Brands | Continental vs. Steven Madden |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |