Correlation Between Lightinthebox Holding and Etsy

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

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

Diversification Opportunities for Lightinthebox Holding and Etsy

-0.15
  Correlation Coefficient
Lightinthebox Holding
Etsy Inc

Good diversification

The 12 months correlation between Lightinthebox and Etsy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lightinthebox Holding Co and Etsy Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc and Lightinthebox Holding 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 Lightinthebox Holding Co 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 Lightinthebox Holding i.e., Lightinthebox Holding and Etsy go up and down completely randomly.

Pair Corralation between Lightinthebox Holding and Etsy

Given the investment horizon of 90 days Lightinthebox Holding Co is expected to under-perform the Etsy. In addition to that, Lightinthebox Holding is 1.83 times more volatile than Etsy Inc. It trades about -0.02 of its total potential returns per unit of risk. Etsy Inc is currently generating about -0.01 per unit of volatility. If you would invest  20,881  in Etsy Inc on October 20, 2021 and sell it today you would lose (4,532)  from holding Etsy Inc or give up 21.7% of portfolio value over 90 days.
Time Period12 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lightinthebox Holding Co  vs.  Etsy Inc

 Performance (%) 
      Timeline 
Lightinthebox Holding 
Lightinthebox Performance
0 of 100
Over the last 90 days Lightinthebox Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lightinthebox Price Channel

Etsy Inc 
Etsy Performance
0 of 100
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 current stock price disturbance, may contribute to short-term losses for the investors.

Etsy Price Channel

Lightinthebox Holding and Etsy Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Lightinthebox Holding and Etsy

The main advantage of trading using opposite Lightinthebox Holding and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lightinthebox Holding 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 Lightinthebox Holding Co 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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