Correlation Between Minerals Technologies and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and Westlake Chemical 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 Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and Westlake Chemical, you can compare the effects of market volatilities on Minerals Technologies and Westlake Chemical 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 Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and Westlake Chemical.
Diversification Opportunities for Minerals Technologies and Westlake Chemical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Minerals and Westlake is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and Westlake Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical 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 Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and Westlake Chemical go up and down completely randomly.
Pair Corralation between Minerals Technologies and Westlake Chemical
Considering the 90-day investment horizon Minerals Technologies is expected to generate 0.98 times more return on investment than Westlake Chemical. However, Minerals Technologies is 1.02 times less risky than Westlake Chemical. It trades about 0.02 of its potential returns per unit of risk. Westlake Chemical is currently generating about -0.01 per unit of risk. If you would invest 5,910 in Minerals Technologies on December 31, 2024 and sell it today you would earn a total of 442.50 from holding Minerals Technologies or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minerals Technologies vs. Westlake Chemical
Performance |
| Timeline |
| Minerals Technologies |
| Westlake Chemical |
Minerals Technologies and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and Westlake Chemical
The main advantage of trading using opposite Minerals Technologies and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
| Westlake Chemical vs. Sensient Technologies | Westlake Chemical vs. Innospec | Westlake Chemical vs. Minerals Technologies | Westlake Chemical vs. Oil Dri |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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