Correlation Between Clarus Corp and JAKKS Pacific

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

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

Diversification Opportunities for Clarus Corp and JAKKS Pacific

0.77

Correlation Coefficient

Clarus Corp  JAKKS Pacific

Poor diversification

The 3 months correlation between Clarus and JAKKS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Clarus Corp and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and Clarus 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 Clarus Corp 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 Clarus Corp i.e., Clarus Corp and JAKKS Pacific go up and down completely randomly.

Pair Corralation between Clarus Corp and JAKKS Pacific

Given the investment horizon of 90 days Clarus Corp is expected to under-perform the JAKKS Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Clarus Corp is 1.19 times less risky than JAKKS Pacific. The stock trades about -0.09 of its potential returns per unit of risk. The JAKKS Pacific is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,690  in JAKKS Pacific on December 29, 2024 and sell it today you would lose (234.00) from holding JAKKS Pacific or give up 8.7% of portfolio value over 90 days.

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

Clarus Corp  vs.  JAKKS Pacific

Clarus Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clarus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Clarus Corp and JAKKS Pacific

The main advantage of trading using opposite Clarus Corp and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clarus Corp 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 Clarus Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.