Correlation Between Etsy and AKA Brands

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Can any of the company-specific risk be diversified away by investing in both Etsy and AKA Brands 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 AKA Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etsy Inc and AKA Brands Holding, you can compare the effects of market volatilities on Etsy and AKA Brands 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 AKA Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and AKA Brands.

Diversification Opportunities for Etsy and AKA Brands

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Etsy and AKA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and AKA Brands Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKA Brands 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 AKA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKA Brands Holding has no effect on the direction of Etsy i.e., Etsy and AKA Brands go up and down completely randomly.

Pair Corralation between Etsy and AKA Brands

Given the investment horizon of 90 days Etsy Inc is expected to under-perform the AKA Brands. But the stock apears to be less risky and, when comparing its historical volatility, Etsy Inc is 2.56 times less risky than AKA Brands. The stock trades about -0.04 of its potential returns per unit of risk. The AKA Brands Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  468.00  in AKA Brands Holding on September 11, 2024 and sell it today you would earn a total of  1,566  from holding AKA Brands Holding or generate 334.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Etsy Inc  vs.  AKA Brands Holding

 Performance 
       Timeline  
Etsy Inc 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Etsy Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Etsy may actually be approaching a critical reversion point that can send shares even higher in January 2025.
AKA Brands Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AKA Brands Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Etsy and AKA Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Etsy and AKA Brands

The main advantage of trading using opposite Etsy and AKA Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etsy position performs unexpectedly, AKA Brands 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 AKA Brands will offset losses from the drop in AKA Brands' long position.
The idea behind Etsy Inc and AKA Brands Holding 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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