Correlation Between Minerals Technologies and Cabot
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and Cabot 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 Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and Cabot, you can compare the effects of market volatilities on Minerals Technologies and Cabot 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 Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and Cabot.
Diversification Opportunities for Minerals Technologies and Cabot
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Minerals and Cabot is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot 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 Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and Cabot go up and down completely randomly.
Pair Corralation between Minerals Technologies and Cabot
Considering the 90-day investment horizon Minerals Technologies is expected to generate 38.58 times less return on investment than Cabot. But when comparing it to its historical volatility, Minerals Technologies is 1.24 times less risky than Cabot. It trades about 0.0 of its potential returns per unit of risk. Cabot is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,003 in Cabot on August 24, 2024 and sell it today you would earn a total of 864.00 from holding Cabot or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minerals Technologies vs. Cabot
Performance |
| Timeline |
| Minerals Technologies |
| Cabot |
Minerals Technologies and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and Cabot
The main advantage of trading using opposite Minerals Technologies and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
| Cabot vs. Eastman Chemical | Cabot vs. Olin Corporation | Cabot vs. LyondellBasell Industries NV | Cabot vs. Air Products and |
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.
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