Correlation Between Minerals Technologies and FutureFuel Corp
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and FutureFuel Corp 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 FutureFuel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and FutureFuel Corp, you can compare the effects of market volatilities on Minerals Technologies and FutureFuel Corp 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 FutureFuel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and FutureFuel Corp.
Diversification Opportunities for Minerals Technologies and FutureFuel Corp
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Minerals and FutureFuel is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and FutureFuel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FutureFuel Corp 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 FutureFuel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FutureFuel Corp has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and FutureFuel Corp go up and down completely randomly.
Pair Corralation between Minerals Technologies and FutureFuel Corp
Considering the 90-day investment horizon Minerals Technologies is expected to generate 0.57 times more return on investment than FutureFuel Corp. However, Minerals Technologies is 1.76 times less risky than FutureFuel Corp. It trades about 0.14 of its potential returns per unit of risk. FutureFuel Corp is currently generating about -0.16 per unit of risk. If you would invest 7,706 in Minerals Technologies on August 24, 2024 and sell it today you would earn a total of 537.00 from holding Minerals Technologies or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Minerals Technologies vs. FutureFuel Corp
Performance |
| Timeline |
| Minerals Technologies |
| FutureFuel Corp |
Minerals Technologies and FutureFuel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and FutureFuel Corp
The main advantage of trading using opposite Minerals Technologies and FutureFuel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, FutureFuel Corp 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 FutureFuel Corp will offset losses from the drop in FutureFuel Corp's long position.| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. Quaker Chemical | FutureFuel Corp vs. Ecovyst | FutureFuel Corp vs. Minerals Technologies |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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