Correlation Between Carnival Plc and Hasbro

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

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

Diversification Opportunities for Carnival Plc and Hasbro

-0.28

Correlation Coefficient

Carnival Plc  Hasbro

Very good diversification

The 3 months correlation between Carnival and Hasbro is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc and Carnival Plc 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 Carnival Plc ADS are associated (or correlated) with Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Carnival Plc i.e., Carnival Plc and Hasbro go up and down completely randomly.

Pair Corralation between Carnival Plc and Hasbro

Considering the 90-day investment horizon Carnival Plc ADS is expected to under-perform the Hasbro. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Plc ADS is 1.34 times less risky than Hasbro. The stock trades about -0.15 of its potential returns per unit of risk. The Hasbro Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5,626  in Hasbro Inc on January 29, 2024 and sell it today you would earn a total of  821.00  from holding Hasbro Inc or generate 14.59% return on investment over 90 days.

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

Carnival Plc ADS  vs.  Hasbro Inc

Carnival Plc ADS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnival Plc ADS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Hasbro Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hasbro Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hasbro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnival Plc and Hasbro

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

The idea behind Carnival Plc ADS and Hasbro Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.