Correlation Between NRG Energy and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both NRG Energy and Minerals Technologies 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 NRG Energy and Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Minerals Technologies, you can compare the effects of market volatilities on NRG Energy and Minerals Technologies 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 NRG Energy with a short position of Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Minerals Technologies.
Diversification Opportunities for NRG Energy and Minerals Technologies
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NRG and Minerals is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and NRG Energy 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 NRG Energy are associated (or correlated) with Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of NRG Energy i.e., NRG Energy and Minerals Technologies go up and down completely randomly.
Pair Corralation between NRG Energy and Minerals Technologies
Considering the 90-day investment horizon NRG Energy is expected to under-perform the Minerals Technologies. In addition to that, NRG Energy is 3.0 times more volatile than Minerals Technologies. It trades about -0.19 of its total potential returns per unit of risk. Minerals Technologies is currently generating about -0.24 per unit of volatility. If you would invest 7,231 in Minerals Technologies on December 10, 2024 and sell it today you would lose (451.00) from holding Minerals Technologies or give up 6.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
NRG Energy vs. Minerals Technologies
Performance |
| Timeline |
| NRG Energy |
| Minerals Technologies |
NRG Energy and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and Minerals Technologies
The main advantage of trading using opposite NRG Energy and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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