Correlation Between Mattel and Escalade Incorporated
Can any of the company-specific risk be diversified away by investing in both Mattel and Escalade Incorporated 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 Escalade Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mattel Inc and Escalade Incorporated, you can compare the effects of market volatilities on Mattel and Escalade Incorporated 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 Escalade Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mattel and Escalade Incorporated.
Diversification Opportunities for Mattel and Escalade Incorporated
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mattel and Escalade is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Escalade Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escalade Incorporated 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 Escalade Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escalade Incorporated has no effect on the direction of Mattel i.e., Mattel and Escalade Incorporated go up and down completely randomly.
Pair Corralation between Mattel and Escalade Incorporated
Considering the 90-day investment horizon Mattel Inc is expected to under-perform the Escalade Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, Mattel Inc is 1.45 times less risky than Escalade Incorporated. The stock trades about -0.11 of its potential returns per unit of risk. The Escalade Incorporated is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,392 in Escalade Incorporated on August 27, 2024 and sell it today you would earn a total of 131.00 from holding Escalade Incorporated or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mattel Inc vs. Escalade Incorporated
Performance |
| Timeline |
| Mattel Inc |
| Escalade Incorporated |
Mattel and Escalade Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mattel and Escalade Incorporated
The main advantage of trading using opposite Mattel and Escalade Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, Escalade Incorporated 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 Escalade Incorporated will offset losses from the drop in Escalade Incorporated's long position.| Mattel vs. Funko Inc | Mattel vs. JAKKS Pacific | Mattel vs. Madison Square Garden | Mattel vs. Life Time Group |
| Escalade Incorporated vs. Johnson Outdoors | Escalade Incorporated vs. First Business Financial | Escalade Incorporated vs. Flexsteel Industries | Escalade Incorporated vs. Superior Uniform 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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