Correlation Between Mattel and BRP

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

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

Diversification Opportunities for Mattel and BRP

0.0

Correlation Coefficient

Mattel  BRP

Pay attention - limited upside

The 3 months correlation between Mattel and BRP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Mattel i.e., Mattel and BRP go up and down completely randomly.

Pair Corralation between Mattel and BRP

Considering the 90-day investment horizon Mattel Inc is expected to under-perform the BRP. But the stock apears to be less risky and, when comparing its historical volatility, Mattel Inc is 1.77 times less risky than BRP. The stock trades about -0.13 of its potential returns per unit of risk. The BRP Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,220  in BRP Inc on March 14, 2024 and sell it today you would lose (134.00) from holding BRP Inc or give up 2.15% of portfolio value over 90 days.

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

Mattel Inc  vs.  BRP Inc

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 weak 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.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mattel and BRP

The main advantage of trading using opposite Mattel and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mattel position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.

The idea behind Mattel Inc and BRP 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.