Correlation Between Minerals Technologies and Nucor

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

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

Diversification Opportunities for Minerals Technologies and Nucor

-0.13

Correlation Coefficient

Minerals Technologies  Nucor

Good diversification

The 3 months correlation between Minerals and Nucor is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor 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 Nucor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and Nucor go up and down completely randomly.

Pair Corralation between Minerals Technologies and Nucor

Assuming the 90 days horizon Minerals Technologies is expected to under-perform the Nucor. But the stock apears to be less risky and, when comparing its historical volatility, Minerals Technologies is 1.82 times less risky than Nucor. The stock trades about -0.18 of its potential returns per unit of risk. The Nucor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,968  in Nucor on December 20, 2024 and sell it today you would earn a total of  878.00  from holding Nucor or generate 8.01% return on investment over 90 days.

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

Minerals Technologies  vs.  Nucor

Minerals Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Minerals Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nucor

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Minerals Technologies and Nucor

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

The idea behind Minerals Technologies and Nucor 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.