Correlation Between Carnival Plc and JAKKS Pacific

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

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

Diversification Opportunities for Carnival Plc and JAKKS Pacific

0.67

Correlation Coefficient

Carnival Plc  JAKKS Pacific

Poor diversification

The 3 months correlation between Carnival and JAKKS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and Carnival Plc 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 Carnival Plc ADS 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 Carnival Plc i.e., Carnival Plc and JAKKS Pacific go up and down completely randomly.

Pair Corralation between Carnival Plc and JAKKS Pacific

Considering the 90-day investment horizon Carnival Plc ADS is expected to under-perform the JAKKS Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Plc ADS is 1.04 times less risky than JAKKS Pacific. The stock trades about -0.1 of its potential returns per unit of risk. The JAKKS Pacific is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,717  in JAKKS Pacific on December 27, 2024 and sell it today you would lose (165.00) from holding JAKKS Pacific or give up 6.07% of portfolio value over 90 days.

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

Carnival Plc ADS  vs.  JAKKS Pacific

Carnival Plc ADS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival Plc ADS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 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 Carnival Plc and JAKKS Pacific

The main advantage of trading using opposite Carnival Plc and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Plc 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 Carnival Plc ADS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.