Correlation Between Mattel and Catalyst Metals

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

By analyzing existing cross correlation between Mattel Inc and Catalyst Metals Limited, you can compare the effects of market volatilities on Mattel and Catalyst Metals 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 Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mattel and Catalyst Metals.

Diversification Opportunities for Mattel and Catalyst Metals

0.34

Correlation Coefficient

Mattel  Catalyst Metals

Weak diversification

The 3 months correlation between Mattel and Catalyst is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Catalyst Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals 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 Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Mattel i.e., Mattel and Catalyst Metals go up and down completely randomly.

Pair Corralation between Mattel and Catalyst Metals

Considering the 90-day investment horizon Mattel Inc is expected to under-perform the Catalyst Metals. But the stock apears to be less risky and, when comparing its historical volatility, Mattel Inc is 4.69 times less risky than Catalyst Metals. The stock trades about 0.0 of its potential returns per unit of risk. The Catalyst Metals Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  54.00  in Catalyst Metals Limited on October 26, 2024 and sell it today you would earn a total of  156.00  from holding Catalyst Metals Limited or generate 288.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.09%
Values	Daily Returns

Mattel Inc  vs.  Catalyst Metals Limited

Mattel Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mattel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Catalyst Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Catalyst Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mattel and Catalyst Metals

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

The idea behind Mattel Inc and Catalyst Metals Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..