Correlation Between Mattel and Sanyo Special

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

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

Diversification Opportunities for Mattel and Sanyo Special

0.09

Correlation Coefficient

Mattel  Sanyo Special

Significant diversification

The 3 months correlation between Mattel and Sanyo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Sanyo Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Special Steel 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 Sanyo Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Special Steel has no effect on the direction of Mattel i.e., Mattel and Sanyo Special go up and down completely randomly.

Pair Corralation between Mattel and Sanyo Special

Considering the 90-day investment horizon Mattel Inc is expected to generate 20.77 times more return on investment than Sanyo Special. However, Mattel is 20.77 times more volatile than Sanyo Special Steel. It trades about 0.02 of its potential returns per unit of risk. Sanyo Special Steel is currently generating about 0.13 per unit of risk. If you would invest  1,870  in Mattel Inc on September 3, 2024 and sell it today you would earn a total of  32.00  from holding Mattel Inc or generate 1.71% 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.  Sanyo Special Steel

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.

Sanyo Special Steel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sanyo Special Steel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Sanyo Special is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mattel and Sanyo Special

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

The idea behind Mattel Inc and Sanyo Special Steel 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .