Correlation Between Parks America and JAKKS Pacific

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

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

Diversification Opportunities for Parks America and JAKKS Pacific

0.58

Correlation Coefficient

Parks America  JAKKS Pacific

Very weak diversification

The 3 months correlation between Parks and JAKKS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Parks America and JAKKS Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAKKS Pacific and Parks America 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 Parks America 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 Parks America i.e., Parks America and JAKKS Pacific go up and down completely randomly.

Pair Corralation between Parks America and JAKKS Pacific

Given the investment horizon of 90 days Parks America is expected to generate 1.53 times less return on investment than JAKKS Pacific. In addition to that, Parks America is 1.49 times more volatile than JAKKS Pacific. It trades about 0.06 of its total potential returns per unit of risk. JAKKS Pacific is currently generating about 0.13 per unit of volatility. If you would invest  2,389  in JAKKS Pacific on September 4, 2024 and sell it today you would earn a total of  562.00  from holding JAKKS Pacific or generate 23.52% return on investment over 90 days.

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

Parks America  vs.  JAKKS Pacific

Parks America

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Parks America are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Parks America sustained solid returns over the last few months and may actually be approaching a breakup point.

JAKKS Pacific

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JAKKS Pacific are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward-looking signals, JAKKS Pacific disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Parks America and JAKKS Pacific

The main advantage of trading using opposite Parks America and JAKKS Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parks America 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 Parks America 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.