Correlation Between BANDAI NAMCO and Mattel

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

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

Diversification Opportunities for BANDAI NAMCO and Mattel

0.03

Correlation Coefficient

BANDAI NAMCO  Mattel

Significant diversification

The 3 months correlation between BANDAI and Mattel is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BANDAI NAMCO Holdings and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and BANDAI NAMCO 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 BANDAI NAMCO Holdings 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 BANDAI NAMCO i.e., BANDAI NAMCO and Mattel go up and down completely randomly.

Pair Corralation between BANDAI NAMCO and Mattel

Assuming the 90 days horizon BANDAI NAMCO is expected to generate 5.0 times less return on investment than Mattel. But when comparing it to its historical volatility, BANDAI NAMCO Holdings is 1.05 times less risky than Mattel. It trades about 0.0 of its potential returns per unit of risk. Mattel Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,772  in Mattel Inc on August 27, 2024 and sell it today you would earn a total of  97.00  from holding Mattel Inc or generate 5.47% return on investment over 90 days.

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

BANDAI NAMCO Holdings  vs.  Mattel Inc

BANDAI NAMCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANDAI NAMCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, BANDAI NAMCO is not utilizing all of its potentials. The current stock price disturbance, 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 comparatively stable basic indicators, Mattel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BANDAI NAMCO and Mattel

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

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 Transaction History module to view history of all your transactions and understand their impact on performance.