Correlation Between Minerals Technologies and BAE Systems
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and BAE Systems 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 BAE Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and BAE Systems PLC, you can compare the effects of market volatilities on Minerals Technologies and BAE Systems 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 BAE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and BAE Systems.
Diversification Opportunities for Minerals Technologies and BAE Systems
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Minerals and BAE is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and BAE Systems PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAE Systems PLC 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 BAE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAE Systems PLC has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and BAE Systems go up and down completely randomly.
Pair Corralation between Minerals Technologies and BAE Systems
Considering the 90-day investment horizon Minerals Technologies is expected to generate 1.12 times more return on investment than BAE Systems. However, Minerals Technologies is 1.12 times more volatile than BAE Systems PLC. It trades about 0.17 of its potential returns per unit of risk. BAE Systems PLC is currently generating about -0.06 per unit of risk. If you would invest 7,644 in Minerals Technologies on August 29, 2024 and sell it today you would earn a total of 676.00 from holding Minerals Technologies or generate 8.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minerals Technologies vs. BAE Systems PLC
Performance |
| Timeline |
| Minerals Technologies |
| BAE Systems PLC |
Minerals Technologies and BAE Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and BAE Systems
The main advantage of trading using opposite Minerals Technologies and BAE Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, BAE Systems 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 BAE Systems will offset losses from the drop in BAE Systems' long position.| Minerals Technologies vs. Oil Dri | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Northern Technologies | Minerals Technologies vs. Cabot |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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