Correlation Between Hasbro and JAKKS Pacific

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

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

Diversification Opportunities for Hasbro and JAKKS Pacific

-0.05

Correlation Coefficient

Hasbro  JAKKS Pacific

Good diversification

The 3 months correlation between Hasbro and JAKKS is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and Hasbro 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 Hasbro Inc 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 Hasbro i.e., Hasbro and JAKKS Pacific go up and down completely randomly.

Pair Corralation between Hasbro and JAKKS Pacific

Considering the 90-day investment horizon Hasbro Inc is expected to generate 0.76 times more return on investment than JAKKS Pacific. However, Hasbro Inc is 1.32 times less risky than JAKKS Pacific. It trades about 0.09 of its potential returns per unit of risk. JAKKS Pacific is currently generating about -0.03 per unit of risk. If you would invest  5,511  in Hasbro Inc on December 28, 2024 and sell it today you would earn a total of  627.00  from holding Hasbro Inc or generate 11.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Hasbro Inc  vs.  JAKKS Pacific

Hasbro Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hasbro Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hasbro unveiled 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 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 Hasbro and JAKKS Pacific

The main advantage of trading using opposite Hasbro and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro 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 Hasbro Inc 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.

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 the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.