Correlation Between MillerKnoll and Ethan Allen

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

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

Diversification Opportunities for MillerKnoll and Ethan Allen

0.61

Correlation Coefficient

MillerKnoll  Ethan Allen

Poor diversification

The 3 months correlation between MillerKnoll and Ethan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MillerKnoll 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 MillerKnoll 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 MillerKnoll 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 MillerKnoll i.e., MillerKnoll and Ethan Allen go up and down completely randomly.

Pair Corralation between MillerKnoll and Ethan Allen

Given the investment horizon of 90 days MillerKnoll is expected to generate 1.43 times more return on investment than Ethan Allen. However, MillerKnoll is 1.43 times more volatile than Ethan Allen Interiors. It trades about -0.06 of its potential returns per unit of risk. Ethan Allen Interiors is currently generating about -0.22 per unit of risk. If you would invest  2,224  in MillerKnoll on December 2, 2024 and sell it today you would lose (74.00) from holding MillerKnoll or give up 3.33% of portfolio value over 90 days.

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

MillerKnoll  vs.  Ethan Allen Interiors

MillerKnoll

Risk-Adjusted Performance

Very Weak

Over the last 90 days MillerKnoll has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ethan Allen Interiors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethan Allen Interiors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with MillerKnoll and Ethan Allen

The main advantage of trading using opposite MillerKnoll and Ethan Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MillerKnoll 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 MillerKnoll 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.