Correlation Between ASPEN TECHINC and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC 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 ASPEN TECHINC and Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN TECHINC DL and Minerals Technologies, you can compare the effects of market volatilities on ASPEN TECHINC 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 ASPEN TECHINC with a short position of Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and Minerals Technologies.
Diversification Opportunities for ASPEN TECHINC and Minerals Technologies
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASPEN and Minerals is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and ASPEN TECHINC 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 ASPEN TECHINC DL 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 ASPEN TECHINC i.e., ASPEN TECHINC and Minerals Technologies go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and Minerals Technologies
Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 0.37 times more return on investment than Minerals Technologies. However, ASPEN TECHINC DL is 2.7 times less risky than Minerals Technologies. It trades about 0.28 of its potential returns per unit of risk. Minerals Technologies is currently generating about -0.19 per unit of risk. If you would invest 23,600 in ASPEN TECHINC DL on October 14, 2024 and sell it today you would earn a total of 600.00 from holding ASPEN TECHINC DL or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASPEN TECHINC DL vs. Minerals Technologies
Performance |
| Timeline |
| ASPEN TECHINC DL |
| Minerals Technologies |
ASPEN TECHINC and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN TECHINC and Minerals Technologies
The main advantage of trading using opposite ASPEN TECHINC and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC 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.| ASPEN TECHINC vs. NEW MILLENNIUM IRON | ASPEN TECHINC vs. The Japan Steel | ASPEN TECHINC vs. RYU Apparel | ASPEN TECHINC vs. AM EAGLE OUTFITTERS |
| Minerals Technologies vs. SHIP HEALTHCARE HLDGINC | Minerals Technologies vs. WESANA HEALTH HOLD | Minerals Technologies vs. Thai Beverage Public | Minerals Technologies vs. United Breweries Co |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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