Correlation Between Grupo Simec and Mattel

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

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

Diversification Opportunities for Grupo Simec and Mattel

-0.29

Correlation Coefficient

Grupo Simec  Mattel

Very good diversification

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

Pair Corralation between Grupo Simec and Mattel

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Mattel. In addition to that, Grupo Simec is 1.5 times more volatile than Mattel Inc. It trades about -0.01 of its total potential returns per unit of risk. Mattel Inc is currently generating about 0.03 per unit of volatility. If you would invest  1,851  in Mattel Inc on September 12, 2024 and sell it today you would earn a total of  52.00  from holding Mattel Inc or generate 2.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Grupo Simec SAB  vs.  Mattel Inc

Grupo Simec SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mattel Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mattel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grupo Simec and Mattel

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

The idea behind Grupo Simec SAB and Mattel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.