Correlation Between Hasbro and Shimano
Can any of the company-specific risk be diversified away by investing in both Hasbro and Shimano 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 Shimano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and Shimano Inc ADR, you can compare the effects of market volatilities on Hasbro and Shimano 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 Shimano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Shimano.
Diversification Opportunities for Hasbro and Shimano
Poor diversification
The 3 months correlation between Hasbro and Shimano is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Shimano Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano Inc ADR 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 Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano Inc ADR has no effect on the direction of Hasbro i.e., Hasbro and Shimano go up and down completely randomly.
Pair Corralation between Hasbro and Shimano
Considering the 90-day investment horizon Hasbro Inc is expected to generate 1.06 times more return on investment than Shimano. However, Hasbro is 1.06 times more volatile than Shimano Inc ADR. It trades about 0.08 of its potential returns per unit of risk. Shimano Inc ADR is currently generating about 0.01 per unit of risk. If you would invest 4,866 in Hasbro Inc on August 27, 2024 and sell it today you would earn a total of 1,386 from holding Hasbro Inc or generate 28.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hasbro Inc vs. Shimano Inc ADR
Performance |
| Timeline |
| Hasbro Inc |
| Shimano Inc ADR |
Hasbro and Shimano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and Shimano
The main advantage of trading using opposite Hasbro and Shimano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro position performs unexpectedly, Shimano 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 Shimano will offset losses from the drop in Shimano's long position.The idea behind Hasbro Inc and Shimano Inc ADR 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.| Shimano vs. Callaway Golf | Shimano vs. Peloton Interactive | Shimano vs. BANDAI NAMCO Holdings | Shimano vs. Nikon Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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