Correlation Between BARRICK and Mattel

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

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

Diversification Opportunities for BARRICK and Mattel

-0.03

Correlation Coefficient

BARRICK  Mattel

Good diversification

The 3 months correlation between BARRICK and Mattel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BARRICK PD AUSTRALIA and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and BARRICK 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 BARRICK PD AUSTRALIA 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 BARRICK i.e., BARRICK and Mattel go up and down completely randomly.

Pair Corralation between BARRICK and Mattel

Assuming the 90 days trading horizon BARRICK PD AUSTRALIA is expected to under-perform the Mattel. But the bond apears to be less risky and, when comparing its historical volatility, BARRICK PD AUSTRALIA is 3.02 times less risky than Mattel. The bond trades about -0.12 of its potential returns per unit of risk. The Mattel Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,942  in Mattel Inc on September 18, 2024 and sell it today you would lose (55.00) from holding Mattel Inc or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

BARRICK PD AUSTRALIA  vs.  Mattel Inc

BARRICK PD AUSTRALIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BARRICK PD AUSTRALIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BARRICK is not utilizing all of its potentials. The current 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BARRICK and Mattel

The main advantage of trading using opposite BARRICK and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BARRICK 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 BARRICK PD AUSTRALIA 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.