Correlation Between Sportsquest and Mattel

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Can any of the company-specific risk be diversified away by investing in both Sportsquest 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 Sportsquest and Mattel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sportsquest and Mattel Inc, you can compare the effects of market volatilities on Sportsquest 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 Sportsquest with a short position of Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportsquest and Mattel.

Diversification Opportunities for Sportsquest and Mattel

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Sportsquest and Mattel is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sportsquest and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Sportsquest 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 Sportsquest 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 Sportsquest i.e., Sportsquest and Mattel go up and down completely randomly.

Pair Corralation between Sportsquest and Mattel

Given the investment horizon of 90 days Sportsquest is expected to generate 14.21 times more return on investment than Mattel. However, Sportsquest is 14.21 times more volatile than Mattel Inc. It trades about 0.03 of its potential returns per unit of risk. Mattel Inc is currently generating about 0.04 per unit of risk. If you would invest  0.03  in Sportsquest on September 18, 2024 and sell it today you would lose (0.01) from holding Sportsquest or give up 33.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Sportsquest  vs.  Mattel Inc

 Performance 
       Timeline  
Sportsquest 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sportsquest are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Sportsquest unveiled solid returns over the last few months and may actually be approaching a breakup point.
Mattel Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mattel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mattel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sportsquest and Mattel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sportsquest and Mattel

The main advantage of trading using opposite Sportsquest and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sportsquest 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 Sportsquest 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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