Correlation Between Etsy and J Long

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

By analyzing existing cross correlation between Etsy Inc and J Long Group Limited, you can compare the effects of market volatilities on Etsy and J Long 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 J Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and J Long.

Diversification Opportunities for Etsy and J Long

-0.07

Correlation Coefficient

Etsy  J Long

Good diversification

The 3 months correlation between Etsy and J Long is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and J Long Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Long Group 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 J Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Long Group has no effect on the direction of Etsy i.e., Etsy and J Long go up and down completely randomly.

Pair Corralation between Etsy and J Long

Given the investment horizon of 90 days Etsy Inc is expected to under-perform the J Long. But the stock apears to be less risky and, when comparing its historical volatility, Etsy Inc is 3.48 times less risky than J Long. The stock trades about -0.06 of its potential returns per unit of risk. The J Long Group Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  365.00  in J Long Group Limited on December 27, 2024 and sell it today you would earn a total of  63.17  from holding J Long Group Limited or generate 17.31% return on investment over 90 days.

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

Etsy Inc  vs.  J Long Group Limited

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

J Long Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, J Long disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Etsy and J Long

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

The idea behind Etsy Inc and J Long Group Limited 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.