Correlation Between Mattel and Clarity Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Mattel and Clarity Pharmaceuticals 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 Clarity Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mattel Inc and Clarity Pharmaceuticals, you can compare the effects of market volatilities on Mattel and Clarity Pharmaceuticals 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 Clarity Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mattel and Clarity Pharmaceuticals.
Diversification Opportunities for Mattel and Clarity Pharmaceuticals
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mattel and Clarity is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Clarity Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarity Pharmaceuticals 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 Clarity Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarity Pharmaceuticals has no effect on the direction of Mattel i.e., Mattel and Clarity Pharmaceuticals go up and down completely randomly.
Pair Corralation between Mattel and Clarity Pharmaceuticals
Considering the 90-day investment horizon Mattel is expected to generate 18.16 times less return on investment than Clarity Pharmaceuticals. But when comparing it to its historical volatility, Mattel Inc is 2.84 times less risky than Clarity Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Clarity Pharmaceuticals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 178.00 in Clarity Pharmaceuticals on November 3, 2024 and sell it today you would earn a total of 62.00 from holding Clarity Pharmaceuticals or generate 34.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Mattel Inc vs. Clarity Pharmaceuticals
Performance |
| Timeline |
| Mattel Inc |
| Clarity Pharmaceuticals |
Mattel and Clarity Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mattel and Clarity Pharmaceuticals
The main advantage of trading using opposite Mattel and Clarity Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, Clarity Pharmaceuticals 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 Clarity Pharmaceuticals will offset losses from the drop in Clarity Pharmaceuticals' long position.| Mattel vs. Funko Inc | Mattel vs. JAKKS Pacific | Mattel vs. Madison Square Garden | Mattel vs. Life Time Group |
| Clarity Pharmaceuticals vs. Estee Lauder Companies | Clarity Pharmaceuticals vs. Toro Co | Clarity Pharmaceuticals vs. Zhihu Inc ADR | Clarity Pharmaceuticals vs. Lincoln Electric 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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