Correlation Between Koppers Holdings and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Koppers Holdings 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 Koppers Holdings and Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koppers Holdings and Minerals Technologies, you can compare the effects of market volatilities on Koppers Holdings 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 Koppers Holdings with a short position of Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koppers Holdings and Minerals Technologies.
Diversification Opportunities for Koppers Holdings and Minerals Technologies
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Koppers and Minerals is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Koppers Holdings and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings i.e., Koppers Holdings and Minerals Technologies go up and down completely randomly.
Pair Corralation between Koppers Holdings and Minerals Technologies
Considering the 90-day investment horizon Koppers Holdings is expected to generate 1.3 times more return on investment than Minerals Technologies. However, Koppers Holdings is 1.3 times more volatile than Minerals Technologies. It trades about 0.16 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.14 per unit of risk. If you would invest 3,477 in Koppers Holdings on August 24, 2024 and sell it today you would earn a total of 382.00 from holding Koppers Holdings or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koppers Holdings vs. Minerals Technologies
Performance |
| Timeline |
| Koppers Holdings |
| Minerals Technologies |
Koppers Holdings and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koppers Holdings and Minerals Technologies
The main advantage of trading using opposite Koppers Holdings and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koppers Holdings 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.| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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