Correlation Between Global E and Etsy

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

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

Diversification Opportunities for Global E and Etsy

0.61

Correlation Coefficient

Global E  Etsy

Poor diversification

The 3 months correlation between Global and Etsy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc and Global E 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 Global E Online are associated (or correlated) with Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of Global E i.e., Global E and Etsy go up and down completely randomly.

Pair Corralation between Global E and Etsy

Given the investment horizon of 90 days Global E Online is expected to under-perform the Etsy. In addition to that, Global E is 1.63 times more volatile than Etsy Inc. It trades about -0.12 of its total potential returns per unit of risk. Etsy Inc is currently generating about 0.14 per unit of volatility. If you would invest  6,590  in Etsy Inc on January 31, 2024 and sell it today you would earn a total of  298.00  from holding Etsy Inc or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Global E Online  vs.  Etsy Inc

Global E Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Etsy Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Etsy Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Global E and Etsy

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

The idea behind Global E Online and Etsy Inc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.