Correlation Between Mattel and Nike
Can any of the company-specific risk be diversified away by investing in both Mattel and Nike 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 Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mattel Inc and Nike Inc, you can compare the effects of market volatilities on Mattel and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mattel and Nike.
Diversification Opportunities for Mattel and Nike
Significant diversification
The 3 months correlation between Mattel and Nike is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Mattel i.e., Mattel and Nike go up and down completely randomly.
Pair Corralation between Mattel and Nike
Considering the 90-day investment horizon Mattel Inc is expected to generate 0.98 times more return on investment than Nike. However, Mattel Inc is 1.02 times less risky than Nike. It trades about 0.02 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest 1,867 in Mattel Inc on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Mattel Inc or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mattel Inc vs. Nike Inc
Performance |
| Timeline |
| Mattel Inc |
| Nike Inc |
Mattel and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mattel and Nike
The main advantage of trading using opposite Mattel and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Mattel vs. Funko Inc | Mattel vs. Madison Square Garden | Mattel vs. Life Time Group | Mattel vs. Six Flags Entertainment |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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