Correlation Between Mattel and Sturm Ruger

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Can any of the company-specific risk be diversified away by investing in both Mattel and Sturm Ruger 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 Sturm Ruger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mattel Inc and Sturm Ruger, you can compare the effects of market volatilities on Mattel and Sturm Ruger 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 Sturm Ruger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mattel and Sturm Ruger.

Diversification Opportunities for Mattel and Sturm Ruger

MattelSturmDiversified AwayMattelSturmDiversified Away100%
0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Mattel and Sturm is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Sturm Ruger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturm Ruger 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 Sturm Ruger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturm Ruger has no effect on the direction of Mattel i.e., Mattel and Sturm Ruger go up and down completely randomly.

Pair Corralation between Mattel and Sturm Ruger

Considering the 90-day investment horizon Mattel Inc is expected to generate 1.32 times more return on investment than Sturm Ruger. However, Mattel is 1.32 times more volatile than Sturm Ruger. It trades about 0.21 of its potential returns per unit of risk. Sturm Ruger is currently generating about 0.17 per unit of risk. If you would invest  1,818  in Mattel Inc on November 25, 2024 and sell it today you would earn a total of  297.00  from holding Mattel Inc or generate 16.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Mattel Inc  vs.  Sturm Ruger

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.15MAT RGR
       Timeline  
Mattel Inc 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Mattel unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb17.51818.51919.52020.52121.522
Sturm Ruger 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sturm Ruger are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Sturm Ruger is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3435363738394041

Mattel and Sturm Ruger Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.67-5.75-3.82-1.890.03211.943.945.947.949.95 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15MAT RGR
       Returns  

Pair Trading with Mattel and Sturm Ruger

The main advantage of trading using opposite Mattel and Sturm Ruger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, Sturm Ruger 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 Sturm Ruger will offset losses from the drop in Sturm Ruger's long position.
The idea behind Mattel Inc and Sturm Ruger 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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