Correlation Between Playtika Holding and Mattel

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

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

Diversification Opportunities for Playtika Holding and Mattel

0.06

Correlation Coefficient

Playtika Holding  Mattel

Significant diversification

The 3 months correlation between Playtika and Mattel is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Playtika Holding 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 Playtika Holding Corp are associated (or correlated) with Mattel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mattel Inc has no effect on the direction of Playtika Holding i.e., Playtika Holding and Mattel go up and down completely randomly.

Pair Corralation between Playtika Holding and Mattel

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 0.8 times more return on investment than Mattel. However, Playtika Holding Corp is 1.25 times less risky than Mattel. It trades about 0.15 of its potential returns per unit of risk. Mattel Inc is currently generating about 0.02 per unit of risk. If you would invest  734.00  in Playtika Holding Corp on September 3, 2024 and sell it today you would earn a total of  108.00  from holding Playtika Holding Corp or generate 14.71% return on investment over 90 days.

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

Playtika Holding Corp  vs.  Mattel Inc

Playtika Holding Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Playtika Holding and Mattel

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

The idea behind Playtika Holding Corp and Mattel 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.