Correlation Between Tesla and Mattel
Can any of the company-specific risk be diversified away by investing in both Tesla and Mattel 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 Tesla and Mattel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Mattel Inc, you can compare the effects of market volatilities on Tesla and Mattel 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 Tesla with a short position of Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Mattel.
Diversification Opportunities for Tesla and Mattel
Good diversification
The 3 months correlation between Tesla and Mattel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Tesla 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 Tesla Inc are associated (or correlated) with Mattel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mattel Inc has no effect on the direction of Tesla i.e., Tesla and Mattel go up and down completely randomly.
Pair Corralation between Tesla and Mattel
Given the investment horizon of 90 days Tesla Inc is expected to generate 2.66 times more return on investment than Mattel. However, Tesla is 2.66 times more volatile than Mattel Inc. It trades about 0.35 of its potential returns per unit of risk. Mattel Inc is currently generating about 0.07 per unit of risk. If you would invest 21,365 in Tesla Inc on August 24, 2024 and sell it today you would earn a total of 12,599 from holding Tesla Inc or generate 58.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Mattel Inc
Performance |
| Timeline |
| Tesla Inc |
| Mattel Inc |
Tesla and Mattel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Mattel
The main advantage of trading using opposite Tesla and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Mattel 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 Mattel will offset losses from the drop in Mattel's long position.The idea behind Tesla Inc and Mattel Inc 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.| Mattel vs. Vista Outdoor | Mattel vs. Six Flags Entertainment | Mattel vs. Canlan Ice Sports | Mattel vs. OneSpaWorld 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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