Correlation Between Mattel and Gentex

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

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

Diversification Opportunities for Mattel and Gentex

0.29

Correlation Coefficient

Mattel  Gentex

Modest diversification

The 3 months correlation between Mattel and Gentex is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Mattel i.e., Mattel and Gentex go up and down completely randomly.

Pair Corralation between Mattel and Gentex

Considering the 90-day investment horizon Mattel is expected to generate 3.3 times less return on investment than Gentex. In addition to that, Mattel is 1.27 times more volatile than Gentex. It trades about 0.02 of its total potential returns per unit of risk. Gentex is currently generating about 0.07 per unit of volatility. If you would invest  2,907  in Gentex on September 13, 2024 and sell it today you would earn a total of  184.00  from holding Gentex or generate 6.33% return on investment over 90 days.

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

Mattel Inc  vs.  Gentex

Mattel Inc

Risk-Adjusted Performance

1 of 100

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Gentex

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Gentex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mattel and Gentex

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

The idea behind Mattel Inc and Gentex 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.