Correlation Between 025537AX9 and Mattel

Can any of the company-specific risk be diversified away by investing in both 025537AX9 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 025537AX9 and Mattel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP 5625 01 MAR 33 and Mattel Inc, you can compare the effects of market volatilities on 025537AX9 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 025537AX9 with a short position of Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of 025537AX9 and Mattel.

Diversification Opportunities for 025537AX9 and Mattel

0.12

Correlation Coefficient

025537AX9  Mattel

Average diversification

The 3 months correlation between 025537AX9 and Mattel is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AEP 5625 01 MAR 33 and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and 025537AX9 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 AEP 5625 01 MAR 33 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 025537AX9 i.e., 025537AX9 and Mattel go up and down completely randomly.

Pair Corralation between 025537AX9 and Mattel

Assuming the 90 days trading horizon AEP 5625 01 MAR 33 is expected to generate 0.3 times more return on investment than Mattel. However, AEP 5625 01 MAR 33 is 3.35 times less risky than Mattel. It trades about -0.01 of its potential returns per unit of risk. Mattel Inc is currently generating about -0.04 per unit of risk. If you would invest  10,418  in AEP 5625 01 MAR 33 on October 10, 2024 and sell it today you would lose (62.00) from holding AEP 5625 01 MAR 33 or give up 0.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

AEP 5625 01 MAR 33  vs.  Mattel Inc

AEP 5625 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEP 5625 01 MAR 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 025537AX9 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with 025537AX9 and Mattel

The main advantage of trading using opposite 025537AX9 and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 025537AX9 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 AEP 5625 01 MAR 33 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.