Correlation Between Visa and Mattel
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Mattel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Mattel Inc, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Mattel.
Diversification Opportunities for Visa and Mattel
Good diversification
The 3 months correlation between Visa and Mattel is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Visa 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 Visa Class A 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 Visa i.e., Visa and Mattel go up and down completely randomly.
Pair Corralation between Visa and Mattel
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than Mattel. However, Visa Class A is 1.94 times less risky than Mattel. It trades about 0.07 of its potential returns per unit of risk. Mattel Inc is currently generating about 0.0 per unit of risk. If you would invest 22,590 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 8,402 from holding Visa Class A or generate 37.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Mattel Inc
Performance |
| Timeline |
| Visa Class A |
| Mattel Inc |
Visa and Mattel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Mattel
The main advantage of trading using opposite Visa and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Mattel vs. Funko Inc | Mattel vs. JAKKS Pacific | Mattel vs. Madison Square Garden | Mattel vs. Life Time 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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