Correlation Between Minerals Technologies and REX American
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and REX American 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 REX American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and REX American Resources, you can compare the effects of market volatilities on Minerals Technologies and REX American 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 REX American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and REX American.
Diversification Opportunities for Minerals Technologies and REX American
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Minerals and REX is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and REX American Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX American Resources 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 REX American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX American Resources has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and REX American go up and down completely randomly.
Pair Corralation between Minerals Technologies and REX American
Considering the 90-day investment horizon Minerals Technologies is expected to generate 0.95 times more return on investment than REX American. However, Minerals Technologies is 1.05 times less risky than REX American. It trades about 0.1 of its potential returns per unit of risk. REX American Resources is currently generating about -0.08 per unit of risk. If you would invest 7,498 in Minerals Technologies on November 3, 2024 and sell it today you would earn a total of 171.00 from holding Minerals Technologies or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minerals Technologies vs. REX American Resources
Performance |
| Timeline |
| Minerals Technologies |
| REX American Resources |
Minerals Technologies and REX American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and REX American
The main advantage of trading using opposite Minerals Technologies and REX American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, REX American 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 REX American will offset losses from the drop in REX American's long position.| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
| REX American vs. Innospec | REX American vs. H B Fuller | REX American vs. Quaker Chemical | REX American 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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