Correlation Between Innospec and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Innospec and Minerals Technologies 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 Innospec and Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innospec and Minerals Technologies, you can compare the effects of market volatilities on Innospec and Minerals Technologies 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 Innospec with a short position of Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innospec and Minerals Technologies.
Diversification Opportunities for Innospec and Minerals Technologies
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innospec and Minerals is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Innospec and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and Innospec 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 Innospec are associated (or correlated) with Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Innospec i.e., Innospec and Minerals Technologies go up and down completely randomly.
Pair Corralation between Innospec and Minerals Technologies
Given the investment horizon of 90 days Innospec is expected to generate 1.78 times less return on investment than Minerals Technologies. In addition to that, Innospec is 1.09 times more volatile than Minerals Technologies. It trades about 0.04 of its total potential returns per unit of risk. Minerals Technologies is currently generating about 0.08 per unit of volatility. If you would invest 6,230 in Minerals Technologies on August 26, 2024 and sell it today you would earn a total of 2,109 from holding Minerals Technologies or generate 33.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innospec vs. Minerals Technologies
Performance |
| Timeline |
| Innospec |
| Minerals Technologies |
Innospec and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innospec and Minerals Technologies
The main advantage of trading using opposite Innospec and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innospec position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient Technologies |
| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |