Correlation Between Etsy and Tidewater

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

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

Diversification Opportunities for Etsy and Tidewater

-0.78

Correlation Coefficient

Etsy  Tidewater

Pay attention - limited upside

The 3 months correlation between Etsy and Tidewater is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Tidewater in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidewater 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 Tidewater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidewater has no effect on the direction of Etsy i.e., Etsy and Tidewater go up and down completely randomly.

Pair Corralation between Etsy and Tidewater

Given the investment horizon of 90 days Etsy Inc is expected to under-perform the Tidewater. In addition to that, Etsy is 1.07 times more volatile than Tidewater. It trades about -0.01 of its total potential returns per unit of risk. Tidewater is currently generating about 0.1 per unit of volatility. If you would invest  2,199  in Tidewater on January 24, 2024 and sell it today you would earn a total of  6,727  from holding Tidewater or generate 305.91% return on investment over 90 days.

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

Etsy Inc  vs.  Tidewater

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

Tidewater

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidewater are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Tidewater showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Etsy and Tidewater

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

The idea behind Etsy Inc and Tidewater 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..