Correlation Between Nova Lifestyle and Ethan Allen
Can any of the company-specific risk be diversified away by investing in both Nova Lifestyle 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 Nova Lifestyle and Ethan Allen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Lifestyle I and Ethan Allen Interiors, you can compare the effects of market volatilities on Nova Lifestyle 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 Nova Lifestyle with a short position of Ethan Allen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Lifestyle and Ethan Allen.
Diversification Opportunities for Nova Lifestyle and Ethan Allen
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nova and Ethan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nova Lifestyle I 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 Nova Lifestyle 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 Nova Lifestyle I 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 Nova Lifestyle i.e., Nova Lifestyle and Ethan Allen go up and down completely randomly.
Pair Corralation between Nova Lifestyle and Ethan Allen
Given the investment horizon of 90 days Nova Lifestyle I is expected to generate 7.29 times more return on investment than Ethan Allen. However, Nova Lifestyle is 7.29 times more volatile than Ethan Allen Interiors. It trades about 0.21 of its potential returns per unit of risk. Ethan Allen Interiors is currently generating about 0.07 per unit of risk. If you would invest 47.00 in Nova Lifestyle I on October 20, 2024 and sell it today you would earn a total of 13.00 from holding Nova Lifestyle I or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Lifestyle I vs. Ethan Allen Interiors
Performance |
| Timeline |
| Nova Lifestyle I |
| Ethan Allen Interiors |
Nova Lifestyle and Ethan Allen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Lifestyle and Ethan Allen
The main advantage of trading using opposite Nova Lifestyle and Ethan Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Lifestyle 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.The idea behind Nova Lifestyle I and Ethan Allen Interiors 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.| Ethan Allen vs. Bassett Furniture Industries | Ethan Allen vs. Natuzzi SpA | Ethan Allen vs. Flexsteel Industries | Ethan Allen vs. Hamilton Beach Brands |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |