Correlation Between Mattel and Sun Country

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

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

Diversification Opportunities for Mattel and Sun Country

0.29

Correlation Coefficient

Mattel  Sun Country

Modest diversification

The 3 months correlation between Mattel and Sun is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines 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 Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Mattel i.e., Mattel and Sun Country go up and down completely randomly.

Pair Corralation between Mattel and Sun Country

Considering the 90-day investment horizon Mattel Inc is expected to generate 0.89 times more return on investment than Sun Country. However, Mattel Inc is 1.13 times less risky than Sun Country. It trades about 0.08 of its potential returns per unit of risk. Sun Country Airlines is currently generating about -0.02 per unit of risk. If you would invest  1,815  in Mattel Inc on December 18, 2024 and sell it today you would earn a total of  202.00  from holding Mattel Inc or generate 11.13% 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.  Sun Country Airlines

Mattel Inc

Risk-Adjusted Performance

Modest

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.

Sun Country Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Country Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Sun Country is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mattel and Sun Country

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

The idea behind Mattel Inc and Sun Country Airlines 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.