Correlation Between Minerals Technologies and 437076BK7

Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and 437076BK7 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 Minerals Technologies and 437076BK7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Minerals Technologies and HOME DEPOT INC, you can compare the effects of market volatilities on Minerals Technologies and 437076BK7 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 Minerals Technologies with a short position of 437076BK7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and 437076BK7.

Diversification Opportunities for Minerals Technologies and 437076BK7

-0.42

Correlation Coefficient

Minerals Technologies  437076BK7

Very good diversification

The 3 months correlation between Minerals and 437076BK7 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and HOME DEPOT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT INC and Minerals Technologies 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 Minerals Technologies are associated (or correlated) with 437076BK7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT INC has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and 437076BK7 go up and down completely randomly.

Pair Corralation between Minerals Technologies and 437076BK7

Considering the 90-day investment horizon Minerals Technologies is expected to generate 9.06 times more return on investment than 437076BK7. However, Minerals Technologies is 9.06 times more volatile than HOME DEPOT INC. It trades about 0.05 of its potential returns per unit of risk. HOME DEPOT INC is currently generating about -0.01 per unit of risk. If you would invest  6,730  in Minerals Technologies on September 14, 2024 and sell it today you would earn a total of  1,158  from holding Minerals Technologies or generate 17.2% return on investment over 90 days.

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

Minerals Technologies  vs.  HOME DEPOT INC

Minerals Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Minerals Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HOME DEPOT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOME DEPOT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 437076BK7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Minerals Technologies and 437076BK7

The main advantage of trading using opposite Minerals Technologies and 437076BK7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, 437076BK7 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 437076BK7 will offset losses from the drop in 437076BK7's long position.

The idea behind Minerals Technologies and HOME DEPOT 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.