Correlation Between BOWL Old and JAKKS Pacific

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

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

Diversification Opportunities for BOWL Old and JAKKS Pacific

-0.24

Correlation Coefficient

BOWL Old  JAKKS Pacific

Very good diversification

The 3 months correlation between BOWL and JAKKS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BOWL Old and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and BOWL Old 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 BOWL Old are associated (or correlated) with JAKKS Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAKKS Pacific has no effect on the direction of BOWL Old i.e., BOWL Old and JAKKS Pacific go up and down completely randomly.

Pair Corralation between BOWL Old and JAKKS Pacific

Given the investment horizon of 90 days BOWL Old is expected to generate 1.06 times more return on investment than JAKKS Pacific. However, BOWL Old is 1.06 times more volatile than JAKKS Pacific. It trades about 0.25 of its potential returns per unit of risk. JAKKS Pacific is currently generating about -0.02 per unit of risk. If you would invest  1,030  in BOWL Old on December 29, 2024 and sell it today you would earn a total of  261.00  from holding BOWL Old or generate 25.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.82%
Values	Daily Returns

BOWL Old  vs.  JAKKS Pacific

BOWL Old

Risk-Adjusted Performance

Solid

Over the last 90 days BOWL Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite fragile basic indicators, BOWL Old disclosed solid returns over the last few months and may actually be approaching a breakup point.

JAKKS Pacific

Risk-Adjusted Performance

Very Weak

Over the last 90 days JAKKS Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, JAKKS Pacific is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BOWL Old and JAKKS Pacific

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

The idea behind BOWL Old and JAKKS Pacific 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.