Correlation Between Ethan Allen and JS Global

Can any of the company-specific risk be diversified away by investing in both Ethan Allen and JS 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 JS 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 JS Global Lifestyle, you can compare the effects of market volatilities on Ethan Allen and JS 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 JS Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethan Allen and JS Global.

Diversification Opportunities for Ethan Allen and JS Global

-0.48

Correlation Coefficient

Ethan Allen  JS Global

Very good diversification

The 3 months correlation between Ethan and JGLCF is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ethan Allen Interiors and JS Global Lifestyle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Global Lifestyle 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 JS Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Global Lifestyle has no effect on the direction of Ethan Allen i.e., Ethan Allen and JS Global go up and down completely randomly.

Pair Corralation between Ethan Allen and JS Global

Considering the 90-day investment horizon Ethan Allen is expected to generate 1.59 times less return on investment than JS Global. But when comparing it to its historical volatility, Ethan Allen Interiors is 1.58 times less risky than JS Global. It trades about 0.04 of its potential returns per unit of risk. JS Global Lifestyle is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  14.00  in JS Global Lifestyle on September 14, 2024 and sell it today you would earn a total of  3.00  from holding JS Global Lifestyle or generate 21.43% return on investment over 90 days.

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

Ethan Allen Interiors  vs.  JS Global Lifestyle

Ethan Allen Interiors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ethan Allen Interiors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ethan Allen is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JS Global Lifestyle

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JS Global Lifestyle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, JS Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ethan Allen and JS Global

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

The idea behind Ethan Allen Interiors and JS Global Lifestyle 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.