Correlation Between Ethan Allen and Boot Barn

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

Diversification Opportunities for Ethan Allen and Boot Barn

0.25

Correlation Coefficient

Ethan Allen  Boot Barn

Modest diversification

The 3 months correlation between Ethan and Boot is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ethan Allen Interiors and Boot Barn Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boot Barn Holdings 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 Boot Barn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boot Barn Holdings has no effect on the direction of Ethan Allen i.e., Ethan Allen and Boot Barn go up and down completely randomly.

Pair Corralation between Ethan Allen and Boot Barn

Considering the 90-day investment horizon Ethan Allen is expected to generate 7.07 times less return on investment than Boot Barn. But when comparing it to its historical volatility, Ethan Allen Interiors is 1.4 times less risky than Boot Barn. It trades about 0.05 of its potential returns per unit of risk. Boot Barn Holdings is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  10,434  in Boot Barn Holdings on April 30, 2025 and sell it today you would earn a total of  7,432  from holding Boot Barn Holdings or generate 71.23% return on investment over 90 days.

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

Ethan Allen Interiors  vs.  Boot Barn Holdings

Ethan Allen Interiors

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ethan Allen Interiors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ethan Allen may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Boot Barn Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boot Barn Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Boot Barn unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethan Allen and Boot Barn

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

The idea behind Ethan Allen Interiors and Boot Barn Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.