Correlation Between Minerals Technologies and Hexcel

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

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

Diversification Opportunities for Minerals Technologies and Hexcel

0.64

Correlation Coefficient

Minerals Technologies  Hexcel

Poor diversification

The 3 months correlation between Minerals and Hexcel is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel and Minerals Technologies 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 Minerals Technologies are associated (or correlated) with Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and Hexcel go up and down completely randomly.

Pair Corralation between Minerals Technologies and Hexcel

Assuming the 90 days horizon Minerals Technologies is expected to under-perform the Hexcel. In addition to that, Minerals Technologies is 1.23 times more volatile than Hexcel. It trades about -0.1 of its total potential returns per unit of risk. Hexcel is currently generating about 0.17 per unit of volatility. If you would invest  5,950  in Hexcel on October 9, 2024 and sell it today you would earn a total of  200.00  from holding Hexcel or generate 3.36% return on investment over 90 days.

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

Minerals Technologies  vs.  Hexcel

Minerals Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Minerals Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hexcel

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hexcel are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hexcel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minerals Technologies and Hexcel

The main advantage of trading using opposite Minerals Technologies and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.

The idea behind Minerals Technologies and Hexcel 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.