Correlation Between Hasbro and American Outdoor
Can any of the company-specific risk be diversified away by investing in both Hasbro and American Outdoor 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 Hasbro and American Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and American Outdoor Brands, you can compare the effects of market volatilities on Hasbro and American Outdoor 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 Hasbro with a short position of American Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and American Outdoor.
Diversification Opportunities for Hasbro and American Outdoor
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hasbro and American is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and Hasbro 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 Hasbro Inc are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of Hasbro i.e., Hasbro and American Outdoor go up and down completely randomly.
Pair Corralation between Hasbro and American Outdoor
Considering the 90-day investment horizon Hasbro Inc is expected to generate 0.69 times more return on investment than American Outdoor. However, Hasbro Inc is 1.45 times less risky than American Outdoor. It trades about 0.08 of its potential returns per unit of risk. American Outdoor Brands is currently generating about 0.05 per unit of risk. If you would invest 4,648 in Hasbro Inc on September 2, 2024 and sell it today you would earn a total of 1,867 from holding Hasbro Inc or generate 40.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hasbro Inc vs. American Outdoor Brands
Performance |
| Timeline |
| Hasbro Inc |
| American Outdoor Brands |
Hasbro and American Outdoor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and American Outdoor
The main advantage of trading using opposite Hasbro and American Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro position performs unexpectedly, American Outdoor 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 American Outdoor will offset losses from the drop in American Outdoor's long position.The idea behind Hasbro Inc and American Outdoor Brands 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.| American Outdoor vs. Clarus Corp | American Outdoor vs. Escalade Incorporated | American Outdoor vs. Johnson Outdoors | American Outdoor vs. JAKKS Pacific |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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