Correlation Between Acushnet Holdings and JAKKS Pacific

Can any of the company-specific risk be diversified away by investing in both Acushnet Holdings 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 Acushnet Holdings and JAKKS Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acushnet Holdings Corp and JAKKS Pacific, you can compare the effects of market volatilities on Acushnet Holdings 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 Acushnet Holdings with a short position of JAKKS Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acushnet Holdings and JAKKS Pacific.

Diversification Opportunities for Acushnet Holdings and JAKKS Pacific

0.33

Correlation Coefficient

Acushnet Holdings  JAKKS Pacific

Weak diversification

The 3 months correlation between Acushnet and JAKKS is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Acushnet Holdings Corp and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and Acushnet Holdings 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 Acushnet Holdings Corp 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 Acushnet Holdings i.e., Acushnet Holdings and JAKKS Pacific go up and down completely randomly.

Pair Corralation between Acushnet Holdings and JAKKS Pacific

Given the investment horizon of 90 days Acushnet Holdings is expected to generate 1.64 times less return on investment than JAKKS Pacific. But when comparing it to its historical volatility, Acushnet Holdings Corp is 1.34 times less risky than JAKKS Pacific. It trades about 0.08 of its potential returns per unit of risk. JAKKS Pacific is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,385  in JAKKS Pacific on August 31, 2024 and sell it today you would earn a total of  415.00  from holding JAKKS Pacific or generate 17.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Acushnet Holdings Corp  vs.  JAKKS Pacific

Acushnet Holdings Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acushnet Holdings Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Acushnet Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

JAKKS Pacific

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JAKKS Pacific are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, JAKKS Pacific disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acushnet Holdings and JAKKS Pacific

The main advantage of trading using opposite Acushnet Holdings and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acushnet Holdings 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.

The idea behind Acushnet Holdings Corp and JAKKS Pacific 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..