Correlation Between Cedar Fair and Mattel

Can any of the company-specific risk be diversified away by investing in both Cedar Fair 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 Cedar Fair and Mattel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cedar Fair LP and Mattel Inc, you can compare the effects of market volatilities on Cedar Fair 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 Cedar Fair with a short position of Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Fair and Mattel.

Diversification Opportunities for Cedar Fair and Mattel

0.17

Correlation Coefficient

Cedar Fair  Mattel

Average diversification

The 3 months correlation between Cedar and Mattel is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Fair LP and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Cedar Fair 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 Cedar Fair LP 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 Cedar Fair i.e., Cedar Fair and Mattel go up and down completely randomly.

Pair Corralation between Cedar Fair and Mattel

Considering the 90-day investment horizon Cedar Fair LP is expected to generate 1.94 times more return on investment than Mattel. However, Cedar Fair is 1.94 times more volatile than Mattel Inc. It trades about 0.26 of its potential returns per unit of risk. Mattel Inc is currently generating about -0.14 per unit of risk. If you would invest  3,810  in Cedar Fair LP on March 2, 2024 and sell it today you would earn a total of  435.00  from holding Cedar Fair LP or generate 11.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cedar Fair LP  vs.  Mattel Inc

Cedar Fair LP

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Cedar Fair LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cedar Fair is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Mattel Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mattel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cedar Fair and Mattel

The main advantage of trading using opposite Cedar Fair and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Fair 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 Cedar Fair LP 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.