Correlation Between Hawkins and Minerals Technologies

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

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

Diversification Opportunities for Hawkins and Minerals Technologies

0.53

Correlation Coefficient

Hawkins  Minerals Technologies

Very weak diversification

The 3 months correlation between Hawkins and Minerals is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and Hawkins 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 Hawkins 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 Hawkins i.e., Hawkins and Minerals Technologies go up and down completely randomly.

Pair Corralation between Hawkins and Minerals Technologies

Given the investment horizon of 90 days Hawkins is expected to generate 1.39 times more return on investment than Minerals Technologies. However, Hawkins is 1.39 times more volatile than Minerals Technologies. It trades about 0.08 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.11 per unit of risk. If you would invest  12,196  in Hawkins on September 3, 2024 and sell it today you would earn a total of  1,469  from holding Hawkins or generate 12.04% return on investment over 90 days.

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

Hawkins  vs.  Minerals Technologies

Hawkins

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward-looking signals, Hawkins displayed solid returns over the last few months and may actually be approaching a breakup point.

Minerals Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Minerals Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hawkins and Minerals Technologies

The main advantage of trading using opposite Hawkins and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins 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 Hawkins 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.