Correlation Between Mattel and Valhi

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

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

Diversification Opportunities for Mattel and Valhi

-0.76

Correlation Coefficient

Mattel  Valhi

Pay attention - limited upside

The 3 months correlation between Mattel and Valhi is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Valhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valhi 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 Valhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valhi Inc has no effect on the direction of Mattel i.e., Mattel and Valhi go up and down completely randomly.

Pair Corralation between Mattel and Valhi

Considering the 90-day investment horizon Mattel Inc is expected to generate 0.9 times more return on investment than Valhi. However, Mattel Inc is 1.11 times less risky than Valhi. It trades about 0.09 of its potential returns per unit of risk. Valhi Inc is currently generating about -0.11 per unit of risk. If you would invest  1,781  in Mattel Inc on December 19, 2024 and sell it today you would earn a total of  215.00  from holding Mattel Inc or generate 12.07% return on investment over 90 days.

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

Mattel Inc  vs.  Valhi Inc

Mattel Inc

Risk-Adjusted Performance

OK

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.

Valhi Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valhi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Mattel and Valhi

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

The idea behind Mattel Inc and Valhi 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.