Correlation Between Mattel and Shimano

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

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

Diversification Opportunities for Mattel and Shimano

0.02

Correlation Coefficient

Mattel  Shimano

Significant diversification

The 3 months correlation between Mattel and Shimano is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Shimano Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano Inc ADR 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 Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano Inc ADR has no effect on the direction of Mattel i.e., Mattel and Shimano go up and down completely randomly.

Pair Corralation between Mattel and Shimano

Considering the 90-day investment horizon Mattel Inc is expected to generate 1.05 times more return on investment than Shimano. However, Mattel is 1.05 times more volatile than Shimano Inc ADR. It trades about 0.02 of its potential returns per unit of risk. Shimano Inc ADR is currently generating about -0.23 per unit of risk. If you would invest  1,871  in Mattel Inc on September 4, 2024 and sell it today you would earn a total of  21.00  from holding Mattel Inc or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Mattel Inc  vs.  Shimano Inc ADR

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.

Shimano Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shimano Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mattel and Shimano

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

The idea behind Mattel Inc and Shimano Inc ADR 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.