Correlation Between Allegroeu and Etsy

Can any of the company-specific risk be diversified away by investing in both Allegroeu and Etsy 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 Allegroeu and Etsy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allegroeu SA and Etsy Inc, you can compare the effects of market volatilities on Allegroeu and Etsy 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 Allegroeu with a short position of Etsy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegroeu and Etsy.

Diversification Opportunities for Allegroeu and Etsy

0.16

Correlation Coefficient

Allegroeu  Etsy

Average diversification

The 3 months correlation between Allegroeu and Etsy is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Allegroeu SA and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc and Allegroeu 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 Allegroeu SA are associated (or correlated) with Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of Allegroeu i.e., Allegroeu and Etsy go up and down completely randomly.

Pair Corralation between Allegroeu and Etsy

Assuming the 90 days horizon Allegroeu SA is expected to generate 1.03 times more return on investment than Etsy. However, Allegroeu is 1.03 times more volatile than Etsy Inc. It trades about 0.22 of its potential returns per unit of risk. Etsy Inc is currently generating about -0.13 per unit of risk. If you would invest  671.00  in Allegroeu SA on December 1, 2024 and sell it today you would earn a total of  94.00  from holding Allegroeu SA or generate 14.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Allegroeu SA  vs.  Etsy Inc

Allegroeu SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allegroeu SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Allegroeu is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Etsy Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Etsy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Etsy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allegroeu and Etsy

The main advantage of trading using opposite Allegroeu and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegroeu position performs unexpectedly, Etsy 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 Etsy will offset losses from the drop in Etsy's long position.

The idea behind Allegroeu SA and Etsy Inc 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.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.