Correlation Between International Consolidated and Minerals Technologies

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

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

Diversification Opportunities for International Consolidated and Minerals Technologies

0.09

Correlation Coefficient

International Consolidated  Minerals Technologies

Significant diversification

The 3 months correlation between International and Minerals is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Minerals Technologies go up and down completely randomly.

Pair Corralation between International Consolidated and Minerals Technologies

Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.1 times more return on investment than Minerals Technologies. However, International Consolidated is 1.1 times more volatile than Minerals Technologies. It trades about 0.36 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.03 per unit of risk. If you would invest  255.00  in International Consolidated Airlines on October 25, 2024 and sell it today you would earn a total of  139.00  from holding International Consolidated Airlines or generate 54.51% return on investment over 90 days.

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

International Consolidated Air  vs.  Minerals Technologies

International Consolidated

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Minerals Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Minerals Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Consolidated and Minerals Technologies

The main advantage of trading using opposite International Consolidated and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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 International Consolidated Airlines 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.