Correlation Between JAKKS Pacific and Brunswick

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

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

Diversification Opportunities for JAKKS Pacific and Brunswick

0.15

Correlation Coefficient

JAKKS Pacific  Brunswick

Average diversification

The 3 months correlation between JAKKS and Brunswick is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding JAKKS Pacific and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick and JAKKS Pacific 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 JAKKS Pacific are associated (or correlated) with Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of JAKKS Pacific i.e., JAKKS Pacific and Brunswick go up and down completely randomly.

Pair Corralation between JAKKS Pacific and Brunswick

Given the investment horizon of 90 days JAKKS Pacific is expected to generate 1.48 times more return on investment than Brunswick. However, JAKKS Pacific is 1.48 times more volatile than Brunswick. It trades about 0.11 of its potential returns per unit of risk. Brunswick is currently generating about -0.02 per unit of risk. If you would invest  2,348  in JAKKS Pacific on September 13, 2024 and sell it today you would earn a total of  463.00  from holding JAKKS Pacific or generate 19.72% return on investment over 90 days.

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

JAKKS Pacific  vs.  Brunswick

JAKKS Pacific

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JAKKS Pacific are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, JAKKS Pacific disclosed solid returns over the last few months and may actually be approaching a breakup point.

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Brunswick is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JAKKS Pacific and Brunswick

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

The idea behind JAKKS Pacific and Brunswick 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.