Correlation Between Hasbro and Vista Outdoor

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

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

Diversification Opportunities for Hasbro and Vista Outdoor

-0.46

Correlation Coefficient

Hasbro  Vista Outdoor

Very good diversification

The 3 months correlation between Hasbro and Vista is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Vista Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Outdoor 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 Vista Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Outdoor has no effect on the direction of Hasbro i.e., Hasbro and Vista Outdoor go up and down completely randomly.

Pair Corralation between Hasbro and Vista Outdoor

Considering the 90-day investment horizon Hasbro Inc is expected to under-perform the Vista Outdoor. But the stock apears to be less risky and, when comparing its historical volatility, Hasbro Inc is 1.1 times less risky than Vista Outdoor. The stock trades about -0.02 of its potential returns per unit of risk. The Vista Outdoor is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,905  in Vista Outdoor on September 3, 2024 and sell it today you would earn a total of  558.00  from holding Vista Outdoor or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Hasbro Inc  vs.  Vista Outdoor

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.

Vista Outdoor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Outdoor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vista Outdoor displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hasbro and Vista Outdoor

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

The idea behind Hasbro Inc and Vista Outdoor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.