Correlation Between Minerals Technologies and Innospec
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and Innospec 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 Innospec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and Innospec, you can compare the effects of market volatilities on Minerals Technologies and Innospec 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 Innospec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and Innospec.
Diversification Opportunities for Minerals Technologies and Innospec
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Minerals and Innospec is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and Innospec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innospec 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 Innospec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innospec has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and Innospec go up and down completely randomly.
Pair Corralation between Minerals Technologies and Innospec
Considering the 90-day investment horizon Minerals Technologies is expected to under-perform the Innospec. But the stock apears to be less risky and, when comparing its historical volatility, Minerals Technologies is 1.05 times less risky than Innospec. The stock trades about -0.2 of its potential returns per unit of risk. The Innospec is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 11,447 in Innospec on November 18, 2024 and sell it today you would lose (628.00) from holding Innospec or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minerals Technologies vs. Innospec
Performance |
| Timeline |
| Minerals Technologies |
| Innospec |
Minerals Technologies and Innospec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and Innospec
The main advantage of trading using opposite Minerals Technologies and Innospec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, Innospec 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 Innospec will offset losses from the drop in Innospec's long position.| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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