Correlation Between Mattel and OmniAb

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

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

Diversification Opportunities for Mattel and OmniAb

-0.06

Correlation Coefficient

Mattel  OmniAb

Good diversification

The 3 months correlation between Mattel and OmniAb is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and OmniAb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OmniAb Inc 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 OmniAb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OmniAb Inc has no effect on the direction of Mattel i.e., Mattel and OmniAb go up and down completely randomly.

Pair Corralation between Mattel and OmniAb

Considering the 90-day investment horizon Mattel Inc is expected to under-perform the OmniAb. But the stock apears to be less risky and, when comparing its historical volatility, Mattel Inc is 10.6 times less risky than OmniAb. The stock trades about -0.12 of its potential returns per unit of risk. The OmniAb Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  33.00  in OmniAb Inc on October 11, 2024 and sell it today you would lose (1.00) from holding OmniAb Inc or give up 3.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

Mattel Inc  vs.  OmniAb Inc

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.

OmniAb Inc

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days OmniAb Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak forward indicators, OmniAb showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mattel and OmniAb

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

The idea behind Mattel Inc and OmniAb Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.