Correlation Between YETI Holdings and JAKKS Pacific

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

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

Diversification Opportunities for YETI Holdings and JAKKS Pacific

0.45

Correlation Coefficient

YETI Holdings  JAKKS Pacific

Very weak diversification

The 3 months correlation between YETI and JAKKS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding YETI Holdings and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and YETI Holdings 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 YETI Holdings 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 YETI Holdings i.e., YETI Holdings and JAKKS Pacific go up and down completely randomly.

Pair Corralation between YETI Holdings and JAKKS Pacific

Given the investment horizon of 90 days YETI Holdings is expected to under-perform the JAKKS Pacific. But the stock apears to be less risky and, when comparing its historical volatility, YETI Holdings is 1.47 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  2,690  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

YETI Holdings  vs.  JAKKS Pacific

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.

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 YETI Holdings and JAKKS Pacific

The main advantage of trading using opposite YETI Holdings and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YETI Holdings 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 YETI Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.