Correlation Between Mattel and Crocs

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

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

Diversification Opportunities for Mattel and Crocs

0.7

Correlation Coefficient

Mattel  Crocs

Poor diversification

The 3 months correlation between Mattel and Crocs is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and Crocs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crocs 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 Crocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crocs Inc has no effect on the direction of Mattel i.e., Mattel and Crocs go up and down completely randomly.

Pair Corralation between Mattel and Crocs

Considering the 90-day investment horizon Mattel Inc is expected to generate 0.8 times more return on investment than Crocs. However, Mattel Inc is 1.25 times less risky than Crocs. It trades about 0.22 of its potential returns per unit of risk. Crocs Inc is currently generating about 0.09 per unit of risk. If you would invest  1,458  in Mattel Inc on April 22, 2025 and sell it today you would earn a total of  480.00  from holding Mattel Inc or generate 32.92% return on investment over 90 days.

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

Mattel Inc  vs.  Crocs Inc

Mattel Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mattel Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mattel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Crocs Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crocs Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Crocs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mattel and Crocs

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

The idea behind Mattel Inc and Crocs 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.