Correlation Between Under Armour and Mattel

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

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

Diversification Opportunities for Under Armour and Mattel

0.04

Correlation Coefficient

Under Armour  Mattel

Significant diversification

The 3 months correlation between Under and Mattel is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and Mattel go up and down completely randomly.

Pair Corralation between Under Armour and Mattel

Allowing for the 90-day total investment horizon Under Armour C is expected to generate 2.39 times more return on investment than Mattel. However, Under Armour is 2.39 times more volatile than Mattel Inc. It trades about -0.01 of its potential returns per unit of risk. Mattel Inc is currently generating about -0.11 per unit of risk. If you would invest  806.00  in Under Armour C on September 26, 2024 and sell it today you would lose (48.00) from holding Under Armour C or give up 5.96% of portfolio value over 90 days.

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

Under Armour C  vs.  Mattel Inc

Under Armour C

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Under Armour C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Under Armour is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Mattel Inc

Risk-Adjusted Performance

0 of 100

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Under Armour and Mattel

The main advantage of trading using opposite Under Armour and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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 Under Armour C 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.