Correlation Between Energy Focu and Ethan Allen

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

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

Diversification Opportunities for Energy Focu and Ethan Allen

0.47

Correlation Coefficient

Energy Focu  Ethan Allen

Very weak diversification

The 3 months correlation between Energy and Ethan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Energy Focu 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 Energy Focu 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 Energy Focu 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 Energy Focu i.e., Energy Focu and Ethan Allen go up and down completely randomly.

Pair Corralation between Energy Focu and Ethan Allen

Given the investment horizon of 90 days Energy Focu is expected to under-perform the Ethan Allen. In addition to that, Energy Focu is 3.48 times more volatile than Ethan Allen Interiors. It trades about -0.01 of its total potential returns per unit of risk. Ethan Allen Interiors is currently generating about 0.05 per unit of volatility. If you would invest  2,770  in Ethan Allen Interiors on January 24, 2024 and sell it today you would earn a total of  635.00  from holding Ethan Allen Interiors or generate 22.92% return on investment over 90 days.

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

Energy Focu  vs.  Ethan Allen Interiors

Energy Focu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Focu are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Energy Focu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ethan Allen Interiors

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethan Allen Interiors are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ethan Allen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Focu and Ethan Allen

The main advantage of trading using opposite Energy Focu and Ethan Allen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Focu 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 Energy Focu 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.