Correlation Between Mattel and Horizon Technology

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

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

Diversification Opportunities for Mattel and Horizon Technology

-0.6

Correlation Coefficient

Mattel  Horizon Technology

Excellent diversification

The 3 months correlation between Mattel and Horizon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Horizon Technology Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Technology 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 Horizon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Technology has no effect on the direction of Mattel i.e., Mattel and Horizon Technology go up and down completely randomly.

Pair Corralation between Mattel and Horizon Technology

Considering the 90-day investment horizon Mattel Inc is expected to under-perform the Horizon Technology. In addition to that, Mattel is 2.67 times more volatile than Horizon Technology Finance. It trades about -0.01 of its total potential returns per unit of risk. Horizon Technology Finance is currently generating about 0.04 per unit of volatility. If you would invest  2,182  in Horizon Technology Finance on October 24, 2024 and sell it today you would earn a total of  294.50  from holding Horizon Technology Finance or generate 13.5% return on investment over 90 days.

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

Mattel Inc  vs.  Horizon Technology Finance

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 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.

Horizon Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Technology Finance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Horizon Technology is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mattel and Horizon Technology

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

The idea behind Mattel Inc and Horizon Technology Finance 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.