Correlation Between Mattel and LCI Industries

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

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

Diversification Opportunities for Mattel and LCI Industries

-0.07

Correlation Coefficient

Mattel  LCI Industries

Good diversification

The 3 months correlation between Mattel and LCI is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and LCI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCI Industries 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 LCI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCI Industries has no effect on the direction of Mattel i.e., Mattel and LCI Industries go up and down completely randomly.

Pair Corralation between Mattel and LCI Industries

Considering the 90-day investment horizon Mattel Inc is expected to generate 1.22 times more return on investment than LCI Industries. However, Mattel is 1.22 times more volatile than LCI Industries. It trades about 0.08 of its potential returns per unit of risk. LCI Industries is currently generating about -0.09 per unit of risk. If you would invest  1,796  in Mattel Inc on December 27, 2024 and sell it today you would earn a total of  180.00  from holding Mattel Inc or generate 10.02% return on investment over 90 days.

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

Mattel Inc  vs.  LCI Industries

Mattel Inc

Risk-Adjusted Performance

Modest

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

LCI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days LCI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Mattel and LCI Industries

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

The idea behind Mattel Inc and LCI Industries 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.