Correlation Between JD Sports and Mattel
Can any of the company-specific risk be diversified away by investing in both JD Sports 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 JD Sports and Mattel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Sports Fashion and Mattel Inc, you can compare the effects of market volatilities on JD Sports 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 JD Sports with a short position of Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Mattel.
Diversification Opportunities for JD Sports and Mattel
Poor diversification
The 3 months correlation between JDSPY and Mattel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and JD Sports 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 JD Sports Fashion 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 JD Sports i.e., JD Sports and Mattel go up and down completely randomly.
Pair Corralation between JD Sports and Mattel
Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Mattel. In addition to that, JD Sports is 2.67 times more volatile than Mattel Inc. It trades about -0.11 of its total potential returns per unit of risk. Mattel Inc is currently generating about 0.21 per unit of volatility. If you would invest 1,773 in Mattel Inc on November 3, 2024 and sell it today you would earn a total of 91.00 from holding Mattel Inc or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Mattel Inc
Performance |
| Timeline |
| JD Sports Fashion |
| Mattel Inc |
JD Sports and Mattel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Mattel
The main advantage of trading using opposite JD Sports and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports 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.| JD Sports vs. Ulta Beauty | JD Sports vs. Williams Sonoma | JD Sports vs. Dicks Sporting Goods | JD Sports vs. Best Buy Co |
| Mattel vs. Funko Inc | Mattel vs. JAKKS Pacific | Mattel vs. Madison Square Garden | Mattel vs. Life Time Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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