Correlation Between Hasbro and Carters

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

By analyzing existing cross correlation between Hasbro Inc and Carters, you can compare the effects of market volatilities on Hasbro and Carters 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 Carters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Carters.

Diversification Opportunities for Hasbro and Carters

0.73

Correlation Coefficient

Hasbro  Carters

Poor diversification

The 3 months correlation between Hasbro and Carters is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters 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 Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Hasbro i.e., Hasbro and Carters go up and down completely randomly.

Pair Corralation between Hasbro and Carters

Considering the 90-day investment horizon Hasbro Inc is expected to generate 0.55 times more return on investment than Carters. However, Hasbro Inc is 1.82 times less risky than Carters. It trades about -0.05 of its potential returns per unit of risk. Carters is currently generating about -0.09 per unit of risk. If you would invest  6,739  in Hasbro Inc on August 30, 2024 and sell it today you would lose (350.00) from holding Hasbro Inc or give up 5.19% of portfolio value over 90 days.

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

Hasbro Inc  vs.  Carters

Hasbro Inc

Risk-Adjusted Performance

0 of 100

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.

Carters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Hasbro and Carters

The main advantage of trading using opposite Hasbro and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro position performs unexpectedly, Carters 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 Carters will offset losses from the drop in Carters' long position.

The idea behind Hasbro Inc and Carters 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.