Correlation Between WEC Energy and Mattel

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

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

Diversification Opportunities for WEC Energy and Mattel

0.01

Correlation Coefficient

WEC Energy  Mattel

Significant diversification

The 3 months correlation between WEC and Mattel is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and WEC Energy 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 WEC Energy Group 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 WEC Energy i.e., WEC Energy and Mattel go up and down completely randomly.

Pair Corralation between WEC Energy and Mattel

Considering the 90-day investment horizon WEC Energy Group is expected to generate 0.76 times more return on investment than Mattel. However, WEC Energy Group is 1.32 times less risky than Mattel. It trades about -0.13 of its potential returns per unit of risk. Mattel Inc is currently generating about -0.12 per unit of risk. If you would invest  9,715  in WEC Energy Group on October 11, 2024 and sell it today you would lose (240.00) from holding WEC Energy Group or give up 2.47% of portfolio value over 90 days.

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

WEC Energy Group  vs.  Mattel Inc

WEC Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WEC Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, WEC Energy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 WEC Energy and Mattel

The main advantage of trading using opposite WEC Energy and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy 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 WEC Energy Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.