Correlation Between Johnson Outdoors and Mattel

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

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

Diversification Opportunities for Johnson Outdoors and Mattel

-0.69

Correlation Coefficient

Johnson Outdoors  Mattel

Excellent diversification

The 3 months correlation between Johnson and Mattel is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Outdoors and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Johnson Outdoors 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 Johnson Outdoors are associated (or correlated) with Mattel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mattel Inc has no effect on the direction of Johnson Outdoors i.e., Johnson Outdoors and Mattel go up and down completely randomly.

Pair Corralation between Johnson Outdoors and Mattel

Given the investment horizon of 90 days Johnson Outdoors is expected to under-perform the Mattel. In addition to that, Johnson Outdoors is 1.01 times more volatile than Mattel Inc. It trades about -0.1 of its total potential returns per unit of risk. Mattel Inc is currently generating about 0.1 per unit of volatility. If you would invest  1,902  in Mattel Inc on November 28, 2024 and sell it today you would earn a total of  254.00  from holding Mattel Inc or generate 13.35% return on investment over 90 days.

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

Johnson Outdoors  vs.  Mattel Inc

Johnson Outdoors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Johnson Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mattel Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Mattel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Johnson Outdoors and Mattel

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

The idea behind Johnson Outdoors and Mattel 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.