Correlation Between Hasbro and Tapestry
Can any of the company-specific risk be diversified away by investing in both Hasbro and Tapestry 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 Tapestry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and Tapestry, you can compare the effects of market volatilities on Hasbro and Tapestry 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 Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Tapestry.
Diversification Opportunities for Hasbro and Tapestry
Excellent diversification
The 3 months correlation between Hasbro and Tapestry is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry 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 Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of Hasbro i.e., Hasbro and Tapestry go up and down completely randomly.
Pair Corralation between Hasbro and Tapestry
Considering the 90-day investment horizon Hasbro Inc is expected to under-perform the Tapestry. But the stock apears to be less risky and, when comparing its historical volatility, Hasbro Inc is 2.26 times less risky than Tapestry. The stock trades about -0.27 of its potential returns per unit of risk. The Tapestry is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 4,354 in Tapestry on August 24, 2024 and sell it today you would earn a total of 1,287 from holding Tapestry or generate 29.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hasbro Inc vs. Tapestry
Performance |
| Timeline |
| Hasbro Inc |
| Tapestry |
Hasbro and Tapestry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and Tapestry
The main advantage of trading using opposite Hasbro and Tapestry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro position performs unexpectedly, Tapestry 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 Tapestry will offset losses from the drop in Tapestry's long position.The idea behind Hasbro Inc and Tapestry 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.| Tapestry vs. Signet Jewelers | Tapestry vs. Movado Group | Tapestry vs. Lanvin Group Holdings | Tapestry vs. TheRealReal |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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