Correlation Between Mattel and Turning Point
Can any of the company-specific risk be diversified away by investing in both Mattel and Turning Point 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 Turning Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mattel Inc and Turning Point Brands, you can compare the effects of market volatilities on Mattel and Turning Point 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 Turning Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mattel and Turning Point.
Diversification Opportunities for Mattel and Turning Point
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mattel and Turning is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Turning Point Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turning Point Brands 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 Turning Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turning Point Brands has no effect on the direction of Mattel i.e., Mattel and Turning Point go up and down completely randomly.
Pair Corralation between Mattel and Turning Point
Considering the 90-day investment horizon Mattel is expected to generate 4.59 times less return on investment than Turning Point. But when comparing it to its historical volatility, Mattel Inc is 1.0 times less risky than Turning Point. It trades about 0.03 of its potential returns per unit of risk. Turning Point Brands is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,174 in Turning Point Brands on November 27, 2024 and sell it today you would earn a total of 4,663 from holding Turning Point Brands or generate 214.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mattel Inc vs. Turning Point Brands
Performance |
Timeline |
Mattel Inc |
Turning Point Brands |
Mattel and Turning Point Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mattel and Turning Point
The main advantage of trading using opposite Mattel and Turning Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, Turning Point 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 Turning Point will offset losses from the drop in Turning Point's long position.Mattel vs. Funko Inc | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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