Correlation Between Tandy Leather and Elutia

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

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

Diversification Opportunities for Tandy Leather and Elutia

0.09

Correlation Coefficient

Tandy Leather  Elutia

Significant diversification

The 3 months correlation between Tandy and Elutia is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory and Elutia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elutia Inc and Tandy Leather 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 Tandy Leather Factory are associated (or correlated) with Elutia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elutia Inc has no effect on the direction of Tandy Leather i.e., Tandy Leather and Elutia go up and down completely randomly.

Pair Corralation between Tandy Leather and Elutia

Considering the 90-day investment horizon Tandy Leather Factory is expected to generate 0.5 times more return on investment than Elutia. However, Tandy Leather Factory is 1.99 times less risky than Elutia. It trades about 0.2 of its potential returns per unit of risk. Elutia Inc is currently generating about -0.08 per unit of risk. If you would invest  400.00  in Tandy Leather Factory on October 6, 2024 and sell it today you would earn a total of  75.00  from holding Tandy Leather Factory or generate 18.75% return on investment over 90 days.

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

Tandy Leather Factory  vs.  Elutia Inc

Tandy Leather Factory

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tandy Leather Factory are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Tandy Leather reported solid returns over the last few months and may actually be approaching a breakup point.

Elutia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elutia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Elutia is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tandy Leather and Elutia

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

The idea behind Tandy Leather Factory and Elutia 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.