Correlation Between Etsy and Jumia Technologies
Can any of the company-specific risk be diversified away by investing in both Etsy and Jumia Technologies 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 Jumia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etsy Inc and Jumia Technologies AG, you can compare the effects of market volatilities on Etsy and Jumia Technologies 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 Jumia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and Jumia Technologies.
Diversification Opportunities for Etsy and Jumia Technologies
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Etsy and Jumia is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Jumia Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumia Technologies 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 Jumia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jumia Technologies has no effect on the direction of Etsy i.e., Etsy and Jumia Technologies go up and down completely randomly.
Pair Corralation between Etsy and Jumia Technologies
Given the investment horizon of 90 days Etsy Inc is expected to generate 0.75 times more return on investment than Jumia Technologies. However, Etsy Inc is 1.33 times less risky than Jumia Technologies. It trades about -0.16 of its potential returns per unit of risk. Jumia Technologies AG is currently generating about -0.15 per unit of risk. If you would invest 5,681 in Etsy Inc on October 21, 2024 and sell it today you would lose (369.00) from holding Etsy Inc or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Etsy Inc vs. Jumia Technologies AG
Performance |
| Timeline |
| Etsy Inc |
| Jumia Technologies |
Etsy and Jumia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etsy and Jumia Technologies
The main advantage of trading using opposite Etsy and Jumia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etsy position performs unexpectedly, Jumia Technologies 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 Jumia Technologies will offset losses from the drop in Jumia Technologies' long position.The idea behind Etsy Inc and Jumia Technologies AG 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.| Jumia Technologies vs. Sea | Jumia Technologies vs. MercadoLibre | Jumia Technologies vs. PDD Holdings | Jumia Technologies vs. JD Inc Adr |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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