Correlation Between DR Horton and JAKKS Pacific
Can any of the company-specific risk be diversified away by investing in both DR Horton 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 DR Horton and JAKKS Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DR Horton and JAKKS Pacific, you can compare the effects of market volatilities on DR Horton 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 DR Horton with a short position of JAKKS Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of DR Horton and JAKKS Pacific.
Diversification Opportunities for DR Horton and JAKKS Pacific
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DHI and JAKKS is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding DR Horton and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and DR Horton 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 DR Horton 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 DR Horton i.e., DR Horton and JAKKS Pacific go up and down completely randomly.
Pair Corralation between DR Horton and JAKKS Pacific
Considering the 90-day investment horizon DR Horton is expected to generate 1.03 times less return on investment than JAKKS Pacific. But when comparing it to its historical volatility, DR Horton is 1.93 times less risky than JAKKS Pacific. It trades about 0.08 of its potential returns per unit of risk. JAKKS Pacific is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,756 in JAKKS Pacific on August 27, 2024 and sell it today you would earn a total of 1,023 from holding JAKKS Pacific or generate 58.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DR Horton vs. JAKKS Pacific
Performance |
| Timeline |
| DR Horton |
| JAKKS Pacific |
DR Horton and JAKKS Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DR Horton and JAKKS Pacific
The main advantage of trading using opposite DR Horton and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DR Horton 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 DR Horton 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.| JAKKS Pacific vs. Escalade Incorporated | JAKKS Pacific vs. Clarus Corp | JAKKS Pacific vs. Six Flags Entertainment | JAKKS Pacific vs. American Outdoor Brands |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |