Correlation Between Mattel and SP500 VIX

Can any of the company-specific risk be diversified away by investing in both Mattel and SP500 VIX 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 SP500 VIX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mattel Inc and SP500 VIX Futures, you can compare the effects of market volatilities on Mattel and SP500 VIX 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 SP500 VIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mattel and SP500 VIX.

Diversification Opportunities for Mattel and SP500 VIX

0.22

Correlation Coefficient

Mattel  SP500 VIX

Modest diversification

The 3 months correlation between Mattel and SP500 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and SP500 VIX Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP500 VIX Futures 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 SP500 VIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP500 VIX Futures has no effect on the direction of Mattel i.e., Mattel and SP500 VIX go up and down completely randomly.

Pair Corralation between Mattel and SP500 VIX

Considering the 90-day investment horizon Mattel Inc is expected to generate 0.72 times more return on investment than SP500 VIX. However, Mattel Inc is 1.38 times less risky than SP500 VIX. It trades about -0.04 of its potential returns per unit of risk. SP500 VIX Futures is currently generating about -0.06 per unit of risk. If you would invest  1,905  in Mattel Inc on September 28, 2024 and sell it today you would lose (105.00) from holding Mattel Inc or give up 5.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Mattel Inc  vs.  SP500 VIX Futures

Pair Trading with Mattel and SP500 VIX

The main advantage of trading using opposite Mattel and SP500 VIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, SP500 VIX 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 SP500 VIX will offset losses from the drop in SP500 VIX's long position.

The idea behind Mattel Inc and SP500 VIX Futures 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 Global Correlations module to find global opportunities by holding instruments from different markets.