Correlation Between Mattel and 629377CU4

Can any of the company-specific risk be diversified away by investing in both Mattel and 629377CU4 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 629377CU4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mattel Inc and NRG 1025, you can compare the effects of market volatilities on Mattel and 629377CU4 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 629377CU4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mattel and 629377CU4.

Diversification Opportunities for Mattel and 629377CU4

-0.01

Correlation Coefficient

Mattel  629377CU4

Good diversification

The 3 months correlation between Mattel and 629377CU4 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and NRG 1025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 629377CU4 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 629377CU4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 629377CU4 has no effect on the direction of Mattel i.e., Mattel and 629377CU4 go up and down completely randomly.

Pair Corralation between Mattel and 629377CU4

Considering the 90-day investment horizon Mattel Inc is expected to generate 0.69 times more return on investment than 629377CU4. However, Mattel Inc is 1.44 times less risky than 629377CU4. It trades about 0.08 of its potential returns per unit of risk. NRG 1025 is currently generating about -0.01 per unit of risk. If you would invest  1,782  in Mattel Inc on December 23, 2024 and sell it today you would earn a total of  198.00  from holding Mattel Inc or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.41%
Values	Daily Returns

Mattel Inc  vs.  NRG 1025

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.

629377CU4

Risk-Adjusted Performance

Very Weak

Over the last 90 days NRG 1025 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 629377CU4 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 629377CU4

The main advantage of trading using opposite Mattel and 629377CU4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, 629377CU4 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 629377CU4 will offset losses from the drop in 629377CU4's long position.

The idea behind Mattel Inc and NRG 1025 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.