Correlation Between Patrick Industries and Ethan Allen
Can any of the company-specific risk be diversified away by investing in both Patrick 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 Patrick 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 Patrick Industries and Ethan Allen Interiors, you can compare the effects of market volatilities on Patrick 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 Patrick Industries with a short position of Ethan Allen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patrick Industries and Ethan Allen.
Diversification Opportunities for Patrick Industries and Ethan Allen
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Patrick and Ethan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Patrick 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 Patrick 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 Patrick 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 Patrick Industries i.e., Patrick Industries and Ethan Allen go up and down completely randomly.
Pair Corralation between Patrick Industries and Ethan Allen
Given the investment horizon of 90 days Patrick Industries is expected to generate 3.03 times less return on investment than Ethan Allen. In addition to that, Patrick Industries is 1.92 times more volatile than Ethan Allen Interiors. It trades about 0.03 of its total potential returns per unit of risk. Ethan Allen Interiors is currently generating about 0.15 per unit of volatility. If you would invest 2,901 in Ethan Allen Interiors on August 31, 2024 and sell it today you would earn a total of 174.00 from holding Ethan Allen Interiors or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patrick Industries vs. Ethan Allen Interiors
Performance |
| Timeline |
| Patrick Industries |
| Ethan Allen Interiors |
Patrick Industries and Ethan Allen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patrick Industries and Ethan Allen
The main advantage of trading using opposite Patrick Industries and Ethan Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patrick 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.| Patrick Industries vs. Bassett Furniture Industries | Patrick Industries vs. Ethan Allen Interiors | Patrick Industries vs. Natuzzi SpA | Patrick Industries vs. Flexsteel Industries |
| Ethan Allen vs. Energy Focu | Ethan Allen vs. Flexsteel Industries | Ethan Allen vs. FGI 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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