Correlation Between Flexsteel Industries and Ethan Allen
Can any of the company-specific risk be diversified away by investing in both Flexsteel Industries and Ethan Allen 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 Flexsteel Industries and Ethan Allen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexsteel Industries and Ethan Allen Interiors, you can compare the effects of market volatilities on Flexsteel Industries and Ethan Allen 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 Flexsteel Industries with a short position of Ethan Allen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexsteel Industries and Ethan Allen.
Diversification Opportunities for Flexsteel Industries and Ethan Allen
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flexsteel and Ethan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Ethan Allen Interiors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethan Allen Interiors and Flexsteel Industries 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 Flexsteel Industries are associated (or correlated) with Ethan Allen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethan Allen Interiors has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and Ethan Allen go up and down completely randomly.
Pair Corralation between Flexsteel Industries and Ethan Allen
Given the investment horizon of 90 days Flexsteel Industries is expected to generate 1.72 times more return on investment than Ethan Allen. However, Flexsteel Industries is 1.72 times more volatile than Ethan Allen Interiors. It trades about 0.09 of its potential returns per unit of risk. Ethan Allen Interiors is currently generating about 0.02 per unit of risk. If you would invest 1,830 in Flexsteel Industries on August 27, 2024 and sell it today you would earn a total of 4,141 from holding Flexsteel Industries or generate 226.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexsteel Industries vs. Ethan Allen Interiors
Performance |
| Timeline |
| Flexsteel Industries |
| Ethan Allen Interiors |
Flexsteel Industries and Ethan Allen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexsteel Industries and Ethan Allen
The main advantage of trading using opposite Flexsteel Industries and Ethan Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexsteel Industries position performs unexpectedly, Ethan Allen 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 Ethan Allen will offset losses from the drop in Ethan Allen's long position.| Flexsteel Industries vs. Willis Lease Finance | Flexsteel Industries vs. Rocky Brands | Flexsteel Industries vs. First Business Financial |
| Ethan Allen vs. Willis Lease Finance | Ethan Allen vs. Rocky Brands | Ethan Allen vs. First Business Financial |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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