Correlation Between Kidpik Corp and Etsy

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

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

Diversification Opportunities for Kidpik Corp and Etsy

-0.04

Correlation Coefficient

Kidpik Corp  Etsy

Good diversification

The 3 months correlation between Kidpik and Etsy is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kidpik Corp and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc and Kidpik Corp 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 Kidpik Corp 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 Kidpik Corp i.e., Kidpik Corp and Etsy go up and down completely randomly.

Pair Corralation between Kidpik Corp and Etsy

Considering the 90-day investment horizon Kidpik Corp is expected to generate 2.15 times more return on investment than Etsy. However, Kidpik Corp is 2.15 times more volatile than Etsy Inc. It trades about 0.03 of its potential returns per unit of risk. Etsy Inc is currently generating about 0.01 per unit of risk. If you would invest  224.00  in Kidpik Corp on September 1, 2024 and sell it today you would earn a total of  3.00  from holding Kidpik Corp or generate 1.34% return on investment over 90 days.

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

Kidpik Corp  vs.  Etsy Inc

Kidpik Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kidpik Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Kidpik Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Etsy Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Etsy Inc are ranked lower than 1 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kidpik Corp and Etsy

The main advantage of trading using opposite Kidpik Corp and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kidpik Corp 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 Kidpik Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.