Correlation Between Johnson Outdoors and JAKKS Pacific
Can any of the company-specific risk be diversified away by investing in both Johnson Outdoors 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 Johnson Outdoors and JAKKS Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Outdoors and JAKKS Pacific, you can compare the effects of market volatilities on Johnson Outdoors 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 Johnson Outdoors with a short position of JAKKS Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Outdoors and JAKKS Pacific.
Diversification Opportunities for Johnson Outdoors and JAKKS Pacific
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Johnson and JAKKS is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Outdoors and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and Johnson Outdoors 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 Johnson Outdoors 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 Johnson Outdoors i.e., Johnson Outdoors and JAKKS Pacific go up and down completely randomly.
Pair Corralation between Johnson Outdoors and JAKKS Pacific
Given the investment horizon of 90 days Johnson Outdoors is expected to generate 1.41 times less return on investment than JAKKS Pacific. But when comparing it to its historical volatility, Johnson Outdoors is 2.05 times less risky than JAKKS Pacific. It trades about 0.13 of its potential returns per unit of risk. JAKKS Pacific is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,658 in JAKKS Pacific on August 28, 2024 and sell it today you would earn a total of 167.00 from holding JAKKS Pacific or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Outdoors vs. JAKKS Pacific
Performance |
| Timeline |
| Johnson Outdoors |
| JAKKS Pacific |
Johnson Outdoors and JAKKS Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Outdoors and JAKKS Pacific
The main advantage of trading using opposite Johnson Outdoors and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Outdoors 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.| Johnson Outdoors vs. Vista Outdoor | Johnson Outdoors vs. Clarus Corp | Johnson Outdoors vs. Escalade Incorporated | Johnson Outdoors vs. JAKKS Pacific |
| 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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