Correlation Between Estee Lauder and Mattel

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Can any of the company-specific risk be diversified away by investing in both Estee Lauder 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 Estee Lauder and Mattel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Estee Lauder Companies and Mattel Inc, you can compare the effects of market volatilities on Estee Lauder 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 Estee Lauder with a short position of Mattel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Mattel.

Diversification Opportunities for Estee Lauder and Mattel

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Estee and Mattel is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and Estee Lauder 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 Estee Lauder Companies 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 Estee Lauder i.e., Estee Lauder and Mattel go up and down completely randomly.

Pair Corralation between Estee Lauder and Mattel

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to generate 0.93 times more return on investment than Mattel. However, Estee Lauder Companies is 1.07 times less risky than Mattel. It trades about 0.28 of its potential returns per unit of risk. Mattel Inc is currently generating about 0.04 per unit of risk. If you would invest  5,741  in Estee Lauder Companies on May 4, 2025 and sell it today you would earn a total of  3,363  from holding Estee Lauder Companies or generate 58.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Estee Lauder Companies  vs.  Mattel Inc

 Performance 
       Timeline  
Estee Lauder Companies 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Estee Lauder Companies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Estee Lauder disclosed solid returns over the last few months and may actually be approaching a breakup point.
Mattel Inc 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mattel may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Estee Lauder and Mattel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Estee Lauder and Mattel

The main advantage of trading using opposite Estee Lauder and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder 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 Estee Lauder Companies 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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