Correlation Between Azul SA and Mattel

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

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

Diversification Opportunities for Azul SA and Mattel

0.13

Correlation Coefficient

Azul SA  Mattel

Average diversification

The 3 months correlation between Azul and Mattel is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Azul SA 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 Azul SA 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 Azul SA i.e., Azul SA and Mattel go up and down completely randomly.

Pair Corralation between Azul SA and Mattel

Given the investment horizon of 90 days Azul SA is expected to under-perform the Mattel. In addition to that, Azul SA is 2.79 times more volatile than Mattel Inc. It trades about -0.33 of its total potential returns per unit of risk. Mattel Inc is currently generating about -0.01 per unit of volatility. If you would invest  1,831  in Mattel Inc on September 20, 2024 and sell it today you would lose (16.00) from holding Mattel Inc or give up 0.87% of portfolio value over 90 days.

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

Azul SA  vs.  Mattel Inc

Azul SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Azul SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 Azul SA and Mattel

The main advantage of trading using opposite Azul SA and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azul SA 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 Azul SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.