Correlation Between Ethan Allen and Fuling Global

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

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

Diversification Opportunities for Ethan Allen and Fuling Global

0.0

Correlation Coefficient

Ethan Allen  Fuling Global

Pay attention - limited upside

The 3 months correlation between Ethan and Fuling is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ethan Allen Interiors and Fuling Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuling Global and Ethan Allen 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 Ethan Allen Interiors are associated (or correlated) with Fuling Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuling Global has no effect on the direction of Ethan Allen i.e., Ethan Allen and Fuling Global go up and down completely randomly.

Pair Corralation between Ethan Allen and Fuling Global

If you would invest  2,253  in Ethan Allen Interiors on January 24, 2024 and sell it today you would earn a total of  1,152  from holding Ethan Allen Interiors or generate 51.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ethan Allen Interiors  vs.  Fuling Global

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.

Fuling Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fuling Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Fuling Global is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ethan Allen and Fuling Global

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

The idea behind Ethan Allen Interiors and Fuling Global 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.