Correlation Between Mattel and Vista Outdoor

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

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

Diversification Opportunities for Mattel and Vista Outdoor

0.0

Correlation Coefficient

Mattel  Vista Outdoor

Pay attention - limited upside

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

Pair Corralation between Mattel and Vista Outdoor

If you would invest  1,768  in Mattel Inc on December 28, 2024 and sell it today you would earn a total of  208.00  from holding Mattel Inc or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mattel Inc  vs.  Vista Outdoor

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.

Vista Outdoor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vista Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vista Outdoor is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mattel and Vista Outdoor

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

The idea behind Mattel Inc and Vista Outdoor 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.