Correlation Between GM and Mattel

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

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

Diversification Opportunities for GM and Mattel

0.47

Correlation Coefficient

GM  Mattel

Very weak diversification

The 3 months correlation between GM and Mattel is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mattel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mattel Inc and GM 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 General Motors 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 GM i.e., GM and Mattel go up and down completely randomly.

Pair Corralation between GM and Mattel

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.76 times more return on investment than Mattel. However, General Motors is 1.31 times less risky than Mattel. It trades about 0.12 of its potential returns per unit of risk. Mattel Inc is currently generating about 0.04 per unit of risk. If you would invest  4,524  in General Motors on May 5, 2025 and sell it today you would earn a total of  729.00  from holding General Motors or generate 16.11% return on investment over 90 days.

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

General Motors  vs.  Mattel Inc

General Motors

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Mattel Inc

Risk-Adjusted Performance

Weak

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.

Pair Trading with GM and Mattel

The main advantage of trading using opposite GM and Mattel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.