Correlation Between Brinker International and Minerals Technologies

Can any of the company-specific risk be diversified away by investing in both Brinker International 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 Brinker International and Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brinker International and Minerals Technologies, you can compare the effects of market volatilities on Brinker International 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 Brinker International with a short position of Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Minerals Technologies.

Diversification Opportunities for Brinker International and Minerals Technologies

0.87

Correlation Coefficient

Brinker International  Minerals Technologies

Very poor diversification

The 3 months correlation between Brinker and Minerals is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and Brinker International 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 Brinker International 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 Brinker International i.e., Brinker International and Minerals Technologies go up and down completely randomly.

Pair Corralation between Brinker International and Minerals Technologies

Considering the 90-day investment horizon Brinker International is expected to generate 1.35 times more return on investment than Minerals Technologies. However, Brinker International is 1.35 times more volatile than Minerals Technologies. It trades about 0.4 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.09 per unit of risk. If you would invest  7,039  in Brinker International on September 13, 2024 and sell it today you would earn a total of  5,706  from holding Brinker International or generate 81.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Brinker International  vs.  Minerals Technologies

Brinker International

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brinker International are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Brinker International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Minerals Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Minerals Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brinker International and Minerals Technologies

The main advantage of trading using opposite Brinker International and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International 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.

The idea behind Brinker International and Minerals Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.