Correlation Between Mattel and XP Power

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

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

Diversification Opportunities for Mattel and XP Power

-0.14

Correlation Coefficient

Mattel  XP Power

Good diversification

The 3 months correlation between Mattel and XPPLF is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mattel Inc and XP Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XP Power Limited 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 XP Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XP Power Limited has no effect on the direction of Mattel i.e., Mattel and XP Power go up and down completely randomly.

Pair Corralation between Mattel and XP Power

Considering the 90-day investment horizon Mattel Inc is expected to under-perform the XP Power. But the stock apears to be less risky and, when comparing its historical volatility, Mattel Inc is 1.79 times less risky than XP Power. The stock trades about -0.07 of its potential returns per unit of risk. The XP Power Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  980.00  in XP Power Limited on May 14, 2025 and sell it today you would earn a total of  220.00  from holding XP Power Limited or generate 22.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Mattel Inc  vs.  XP Power Limited

Mattel Inc

Risk-Adjusted Performance

Weakest

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 uncertain 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.

XP Power Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in XP Power Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, XP Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mattel and XP Power

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

The idea behind Mattel Inc and XP Power Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.