Correlation Between EXPRESS and Mattel

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

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

Diversification Opportunities for EXPRESS and Mattel

0.52

Correlation Coefficient

EXPRESS  Mattel

Very weak diversification

The 3 months correlation between EXPRESS and Mattel is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding EXPRESS SCRIPTS HLDG and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and EXPRESS 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 EXPRESS SCRIPTS HLDG 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 EXPRESS i.e., EXPRESS and Mattel go up and down completely randomly.

Pair Corralation between EXPRESS and Mattel

Assuming the 90 days trading horizon EXPRESS SCRIPTS HLDG is expected to under-perform the Mattel. But the bond apears to be less risky and, when comparing its historical volatility, EXPRESS SCRIPTS HLDG is 2.79 times less risky than Mattel. The bond trades about -0.05 of its potential returns per unit of risk. The Mattel Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,782  in Mattel Inc on December 22, 2024 and sell it today you would earn a total of  198.00  from holding Mattel Inc or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.89%
Values	Daily Returns

EXPRESS SCRIPTS HLDG  vs.  Mattel Inc

EXPRESS SCRIPTS HLDG

Risk-Adjusted Performance

Very Weak

Over the last 90 days EXPRESS SCRIPTS HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EXPRESS 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

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Mattel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EXPRESS and Mattel

The main advantage of trading using opposite EXPRESS and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EXPRESS 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 EXPRESS SCRIPTS HLDG 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.