Correlation Between Etsy and AutoZone

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

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

Diversification Opportunities for Etsy and AutoZone

-0.71

Correlation Coefficient

Etsy  AutoZone

Pay attention - limited upside

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

Pair Corralation between Etsy and AutoZone

Given the investment horizon of 90 days Etsy Inc is expected to under-perform the AutoZone. In addition to that, Etsy is 2.07 times more volatile than AutoZone. It trades about -0.06 of its total potential returns per unit of risk. AutoZone is currently generating about -0.04 per unit of volatility. If you would invest  300,602  in AutoZone on January 30, 2024 and sell it today you would lose (6,004) from holding AutoZone or give up 2.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Etsy Inc  vs.  AutoZone

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

AutoZone

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AutoZone is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Etsy and AutoZone

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

The idea behind Etsy Inc and AutoZone 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.