Correlation Between Hasbro and Johnson Outdoors

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Can any of the company-specific risk be diversified away by investing in both Hasbro and Johnson Outdoors 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 Johnson Outdoors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and Johnson Outdoors, you can compare the effects of market volatilities on Hasbro and Johnson Outdoors 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 Johnson Outdoors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Johnson Outdoors.

Diversification Opportunities for Hasbro and Johnson Outdoors

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Hasbro and Johnson is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Johnson Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Outdoors 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 Johnson Outdoors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Outdoors has no effect on the direction of Hasbro i.e., Hasbro and Johnson Outdoors go up and down completely randomly.

Pair Corralation between Hasbro and Johnson Outdoors

Considering the 90-day investment horizon Hasbro Inc is expected to under-perform the Johnson Outdoors. But the stock apears to be less risky and, when comparing its historical volatility, Hasbro Inc is 1.42 times less risky than Johnson Outdoors. The stock trades about -0.08 of its potential returns per unit of risk. The Johnson Outdoors is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,237  in Johnson Outdoors on August 31, 2024 and sell it today you would earn a total of  92.00  from holding Johnson Outdoors or generate 2.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Hasbro Inc  vs.  Johnson Outdoors

 Performance 
       Timeline  
Hasbro Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hasbro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hasbro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Johnson Outdoors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Johnson Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Johnson Outdoors is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Hasbro and Johnson Outdoors Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hasbro and Johnson Outdoors

The main advantage of trading using opposite Hasbro and Johnson Outdoors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro position performs unexpectedly, Johnson Outdoors 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 Johnson Outdoors will offset losses from the drop in Johnson Outdoors' long position.
The idea behind Hasbro Inc and Johnson Outdoors 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.
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 Valuation module to check real value of public entities based on technical and fundamental data.

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