Correlation Between Etsy and Betterware

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

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

Diversification Opportunities for Etsy and Betterware

0.27

Correlation Coefficient

Etsy  Betterware

Modest diversification

The 3 months correlation between Etsy and Betterware is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Betterware de Mxico, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betterware de Mxico, 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 Betterware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betterware de Mxico, has no effect on the direction of Etsy i.e., Etsy and Betterware go up and down completely randomly.

Pair Corralation between Etsy and Betterware

Given the investment horizon of 90 days Etsy Inc is expected to under-perform the Betterware. But the stock apears to be less risky and, when comparing its historical volatility, Etsy Inc is 1.18 times less risky than Betterware. The stock trades about -0.03 of its potential returns per unit of risk. The Betterware de Mxico, is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,806  in Betterware de Mxico, on March 12, 2024 and sell it today you would lose (145.00) from holding Betterware de Mxico, or give up 8.03% of portfolio value over 90 days.

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

Etsy Inc  vs.  Betterware de Mxico,

Etsy Inc

Risk-Adjusted Performance

0 of 100

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 current stock price disturbance, may contribute to short-term losses for the investors.

Betterware de Mxico,

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Etsy and Betterware

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

The idea behind Etsy Inc and Betterware de Mxico, 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.