Correlation Between Mattel and Hasbro

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

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

Diversification Opportunities for Mattel and Hasbro

0.07

Correlation Coefficient

Mattel  Hasbro

Significant diversification

The 3 months correlation between Mattel and Hasbro is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc and Mattel 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 Mattel Inc are associated (or correlated) with Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Mattel i.e., Mattel and Hasbro go up and down completely randomly.

Pair Corralation between Mattel and Hasbro

Considering the 90-day investment horizon Mattel is expected to generate 1.51 times less return on investment than Hasbro. But when comparing it to its historical volatility, Mattel Inc is 1.04 times less risky than Hasbro. It trades about 0.02 of its potential returns per unit of risk. Hasbro Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,502  in Hasbro Inc on September 3, 2024 and sell it today you would earn a total of  1,013  from holding Hasbro Inc or generate 18.41% return on investment over 90 days.

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

Mattel Inc  vs.  Hasbro Inc

Mattel Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Hasbro Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hasbro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hasbro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mattel and Hasbro

The main advantage of trading using opposite Mattel and Hasbro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, Hasbro 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 Hasbro will offset losses from the drop in Hasbro's long position.

The idea behind Mattel Inc and Hasbro 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.