Correlation Between Mattel and Trio Petroleum

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

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

Diversification Opportunities for Mattel and Trio Petroleum

0.0

Correlation Coefficient

Mattel  Trio Petroleum

Pay attention - limited upside

The 3 months correlation between Mattel and Trio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Trio Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Petroleum 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 Trio Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Petroleum Corp has no effect on the direction of Mattel i.e., Mattel and Trio Petroleum go up and down completely randomly.

Pair Corralation between Mattel and Trio Petroleum

Considering the 90-day investment horizon Mattel is expected to generate 16.53 times less return on investment than Trio Petroleum. But when comparing it to its historical volatility, Mattel Inc is 6.76 times less risky than Trio Petroleum. It trades about 0.05 of its potential returns per unit of risk. Trio Petroleum Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Trio Petroleum Corp on December 17, 2024 and sell it today you would earn a total of  62.00  from holding Trio Petroleum Corp or generate 74.7% return on investment over 90 days.

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

Mattel Inc  vs.  Trio Petroleum Corp

Mattel Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 3 (%) 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.

Trio Petroleum Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Petroleum Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Trio Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mattel and Trio Petroleum

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

The idea behind Mattel Inc and Trio Petroleum 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.