Correlation Between Hasbro and Cedar Fair

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

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

Diversification Opportunities for Hasbro and Cedar Fair

-0.5

Correlation Coefficient

Hasbro  Cedar Fair

Very good diversification

The 3 months correlation between Hasbro and Cedar is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Cedar Fair LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Fair LP 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 Cedar Fair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Fair LP has no effect on the direction of Hasbro i.e., Hasbro and Cedar Fair go up and down completely randomly.

Pair Corralation between Hasbro and Cedar Fair

Considering the 90-day investment horizon Hasbro Inc is expected to generate 1.82 times more return on investment than Cedar Fair. However, Hasbro is 1.82 times more volatile than Cedar Fair LP. It trades about 0.19 of its potential returns per unit of risk. Cedar Fair LP is currently generating about -0.08 per unit of risk. If you would invest  5,484  in Hasbro Inc on February 3, 2024 and sell it today you would earn a total of  664.00  from holding Hasbro Inc or generate 12.11% return on investment over 90 days.

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

Hasbro Inc  vs.  Cedar Fair LP

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 unsteady basic indicators, Hasbro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cedar Fair LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cedar Fair LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cedar Fair is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hasbro and Cedar Fair

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

The idea behind Hasbro Inc and Cedar Fair LP 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.