Correlation Between Mattel and Life Time

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

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

Diversification Opportunities for Mattel and Life Time

0.81

Correlation Coefficient

Mattel  Life Time

Very poor diversification

The 3 months correlation between Mattel and Life is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Mattel i.e., Mattel and Life Time go up and down completely randomly.

Pair Corralation between Mattel and Life Time

Considering the 90-day investment horizon Mattel is expected to generate 3.66 times less return on investment than Life Time. In addition to that, Mattel is 1.08 times more volatile than Life Time Group. It trades about 0.08 of its total potential returns per unit of risk. Life Time Group is currently generating about 0.3 per unit of volatility. If you would invest  2,192  in Life Time Group on December 27, 2024 and sell it today you would earn a total of  1,065  from holding Life Time Group or generate 48.59% return on investment over 90 days.

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

Mattel Inc  vs.  Life Time Group

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.

Life Time Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Life Time Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Life Time demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mattel and Life Time

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

The idea behind Mattel Inc and Life Time Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.