Correlation Between Mattel and BKV

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

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

Diversification Opportunities for Mattel and BKV

-0.53

Correlation Coefficient

Mattel  BKV

Excellent diversification

The 3 months correlation between Mattel and BKV is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation and Mattel 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 Mattel Inc are associated (or correlated) with BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Mattel i.e., Mattel and BKV go up and down completely randomly.

Pair Corralation between Mattel and BKV

Considering the 90-day investment horizon Mattel is expected to generate 15.04 times less return on investment than BKV. But when comparing it to its historical volatility, Mattel Inc is 1.65 times less risky than BKV. It trades about 0.04 of its potential returns per unit of risk. BKV Corporation is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  2,197  in BKV Corporation on October 23, 2024 and sell it today you would earn a total of  241.00  from holding BKV Corporation or generate 10.97% return on investment over 90 days.

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

Mattel Inc  vs.  BKV Corp.

Mattel Inc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mattel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

BKV Corporation

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mattel and BKV

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

The idea behind Mattel Inc and BKV Corporation 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.