Correlation Between Etsy and Alibaba Group

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

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

Diversification Opportunities for Etsy and Alibaba Group

0.71
  Correlation Coefficient
Etsy Inc
Alibaba Group Holding

Poor diversification

The 3 months correlation between Etsy and Alibaba is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Alibaba Group Holding Limited in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Etsy i.e. Etsy and Alibaba Group go up and down completely randomly.

Pair Corralation between Etsy and Alibaba Group

Given the investment horizon of 30 days, Etsy Inc is expected to generate 1.59 times more return on investment than Alibaba Group. However, Etsy is 1.59 times more volatile than Alibaba Group Holding. It trades about 0.37 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.15 per unit of risk. If you would invest  5,100  in Etsy Inc on June 7, 2020 and sell it today you would earn a total of  6,197  from holding Etsy Inc or generate 121.51% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Etsy Inc  vs.  Alibaba Group Holding Limited

 Performance (%) 
      Timeline 
Etsy Inc 
2525

Etsy Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Etsy Inc are ranked lower than 25 (%) of all global equities and portfolios over the last 30 days. In spite of fairly weak basic indicators, Etsy showed solid returns over the last few months and may actually be approaching a breakup point.
Alibaba Group Holding 
1010

Alibaba Group Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Alibaba Group Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 30 days. Despite somewhat weak basic indicators, Alibaba Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Etsy and Alibaba Group Volatility Contrast

 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.


 
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