Correlation Between Carnival Plc and JAKKS Pacific
Can any of the company-specific risk be diversified away by investing in both Carnival Plc 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 Carnival Plc and JAKKS Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival plc and JAKKS Pacific, you can compare the effects of market volatilities on Carnival Plc 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 Carnival Plc with a short position of JAKKS Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Plc and JAKKS Pacific.
Diversification Opportunities for Carnival Plc and JAKKS Pacific
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carnival and JAKKS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Carnival plc and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and Carnival Plc 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 Carnival plc 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 Carnival Plc i.e., Carnival Plc and JAKKS Pacific go up and down completely randomly.
Pair Corralation between Carnival Plc and JAKKS Pacific
Assuming the 90 days horizon Carnival plc is expected to generate 1.38 times more return on investment than JAKKS Pacific. However, Carnival Plc is 1.38 times more volatile than JAKKS Pacific. It trades about 0.07 of its potential returns per unit of risk. JAKKS Pacific is currently generating about 0.01 per unit of risk. If you would invest 1,250 in Carnival plc on September 2, 2024 and sell it today you would earn a total of 1,100 from holding Carnival plc or generate 88.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival plc vs. JAKKS Pacific
Performance |
| Timeline |
| Carnival plc |
| JAKKS Pacific |
Carnival Plc and JAKKS Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival Plc and JAKKS Pacific
The main advantage of trading using opposite Carnival Plc and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Plc 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.| Carnival Plc vs. Planet Fitness | Carnival Plc vs. Plby Group | Carnival Plc vs. Shimano Inc ADR | Carnival Plc vs. Madison Square Garden |
| JAKKS Pacific vs. LCI Industries | JAKKS Pacific vs. MCBC Holdings | JAKKS Pacific vs. Winnebago Industries | JAKKS Pacific vs. Thor Industries |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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