Correlation Between Mattel and Leatt Corp

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

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

Diversification Opportunities for Mattel and Leatt Corp

0.38

Correlation Coefficient

Mattel  Leatt Corp

Weak diversification

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

Pair Corralation between Mattel and Leatt Corp

Considering the 90-day investment horizon Mattel Inc is expected to generate 0.66 times more return on investment than Leatt Corp. However, Mattel Inc is 1.52 times less risky than Leatt Corp. It trades about 0.03 of its potential returns per unit of risk. Leatt Corp is currently generating about -0.08 per unit of risk. If you would invest  1,851  in Mattel Inc on September 12, 2024 and sell it today you would earn a total of  52.00  from holding Mattel Inc or generate 2.81% 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.  Leatt Corp

Mattel Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 2 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Leatt Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leatt Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mattel and Leatt Corp

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

The idea behind Mattel Inc and Leatt Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.