Correlation Between Alphabet and Mattel
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and Mattel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Mattel Inc, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Mattel.
Diversification Opportunities for Alphabet and Mattel
Modest diversification
The 3 months correlation between Alphabet and Mattel is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Mattel go up and down completely randomly.
Pair Corralation between Alphabet and Mattel
Given the investment horizon of 90 days Alphabet is expected to generate 1.22 times less return on investment than Mattel. But when comparing it to its historical volatility, Alphabet Inc Class C is 1.26 times less risky than Mattel. It trades about 0.08 of its potential returns per unit of risk. Mattel Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,778 in Mattel Inc on August 24, 2024 and sell it today you would earn a total of 60.00 from holding Mattel Inc or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Mattel Inc
Performance |
| Timeline |
| Alphabet Class C |
| Mattel Inc |
Alphabet and Mattel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Mattel
The main advantage of trading using opposite Alphabet and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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.| Mattel vs. Vista Outdoor | Mattel vs. Six Flags Entertainment | Mattel vs. Canlan Ice Sports | Mattel vs. OneSpaWorld Holdings |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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