Correlation Between JAKKS Pacific and Clarus Corp

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

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

Diversification Opportunities for JAKKS Pacific and Clarus Corp

0.8

Correlation Coefficient

JAKKS Pacific  Clarus Corp

Very poor diversification

The 3 months correlation between JAKKS and Clarus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JAKKS Pacific and Clarus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarus Corp 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 Clarus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarus Corp has no effect on the direction of JAKKS Pacific i.e., JAKKS Pacific and Clarus Corp go up and down completely randomly.

Pair Corralation between JAKKS Pacific and Clarus Corp

Given the investment horizon of 90 days JAKKS Pacific is expected to generate 1.2 times more return on investment than Clarus Corp. However, JAKKS Pacific is 1.2 times more volatile than Clarus Corp. It trades about -0.04 of its potential returns per unit of risk. Clarus Corp is currently generating about -0.09 per unit of risk. If you would invest  2,690  in JAKKS Pacific on December 28, 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	Strong
Accuracy	100.0%
Values	Daily Returns

JAKKS Pacific  vs.  Clarus Corp

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.

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.

Pair Trading with JAKKS Pacific and Clarus Corp

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

The idea behind JAKKS Pacific and Clarus Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.