Correlation Between JAKKS Pacific and YETI Holdings

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

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

Diversification Opportunities for JAKKS Pacific and YETI Holdings

0.45

Correlation Coefficient

JAKKS Pacific  YETI Holdings

Very weak diversification

The 3 months correlation between JAKKS and YETI is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding JAKKS Pacific and YETI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YETI Holdings 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 YETI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YETI Holdings has no effect on the direction of JAKKS Pacific i.e., JAKKS Pacific and YETI Holdings go up and down completely randomly.

Pair Corralation between JAKKS Pacific and YETI Holdings

Given the investment horizon of 90 days JAKKS Pacific is expected to generate 1.47 times more return on investment than YETI Holdings. However, JAKKS Pacific is 1.47 times more volatile than YETI Holdings. It trades about -0.02 of its potential returns per unit of risk. YETI Holdings is currently generating about -0.1 per unit of risk. If you would invest  2,690  in JAKKS Pacific on December 28, 2024 and sell it today you would lose (142.00) from holding JAKKS Pacific or give up 5.28% of portfolio value over 90 days.

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

JAKKS Pacific  vs.  YETI Holdings

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.

YETI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days YETI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with JAKKS Pacific and YETI Holdings

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

The idea behind JAKKS Pacific and YETI Holdings 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.