Correlation Between Mattel and Hunter Creek

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

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

Diversification Opportunities for Mattel and Hunter Creek

-0.38

Correlation Coefficient

Mattel  Hunter Creek

Very good diversification

The 3 months correlation between Mattel and Hunter is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Hunter Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Creek Mining 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 Hunter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Creek Mining has no effect on the direction of Mattel i.e., Mattel and Hunter Creek go up and down completely randomly.

Pair Corralation between Mattel and Hunter Creek

Considering the 90-day investment horizon Mattel is expected to generate 59.13 times less return on investment than Hunter Creek. But when comparing it to its historical volatility, Mattel Inc is 52.36 times less risky than Hunter Creek. It trades about 0.09 of its potential returns per unit of risk. Hunter Creek Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9.80  in Hunter Creek Mining on December 19, 2024 and sell it today you would lose (9.80) from holding Hunter Creek Mining or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Mattel Inc  vs.  Hunter Creek Mining

Mattel Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 6 (%) 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.

Hunter Creek Mining

Risk-Adjusted Performance

OK

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

Pair Trading with Mattel and Hunter Creek

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

The idea behind Mattel Inc and Hunter Creek Mining 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.