Correlation Between Mattel and Summa Silver

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

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

Diversification Opportunities for Mattel and Summa Silver

0.21

Correlation Coefficient

Mattel  Summa Silver

Modest diversification

The 3 months correlation between Mattel and Summa is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver Corp 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 Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Mattel i.e., Mattel and Summa Silver go up and down completely randomly.

Pair Corralation between Mattel and Summa Silver

Considering the 90-day investment horizon Mattel Inc is expected to under-perform the Summa Silver. But the stock apears to be less risky and, when comparing its historical volatility, Mattel Inc is 2.6 times less risky than Summa Silver. The stock trades about -0.17 of its potential returns per unit of risk. The Summa Silver Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Summa Silver Corp on September 25, 2024 and sell it today you would lose (1.00) from holding Summa Silver Corp or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Mattel Inc  vs.  Summa Silver Corp

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.

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mattel and Summa Silver

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

The idea behind Mattel Inc and Summa Silver Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.