Correlation Between Minerals Technologies and BorgWarner

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

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

Diversification Opportunities for Minerals Technologies and BorgWarner

0.34

Correlation Coefficient

Minerals Technologies  BorgWarner

Weak diversification

The 3 months correlation between Minerals and BorgWarner is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner 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 BorgWarner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BorgWarner has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and BorgWarner go up and down completely randomly.

Pair Corralation between Minerals Technologies and BorgWarner

Considering the 90-day investment horizon Minerals Technologies is expected to generate 1.0 times less return on investment than BorgWarner. In addition to that, Minerals Technologies is 1.05 times more volatile than BorgWarner. It trades about 0.09 of its total potential returns per unit of risk. BorgWarner is currently generating about 0.09 per unit of volatility. If you would invest  3,211  in BorgWarner on September 13, 2024 and sell it today you would earn a total of  298.00  from holding BorgWarner or generate 9.28% return on investment over 90 days.

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

Minerals Technologies  vs.  BorgWarner

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.

BorgWarner

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BorgWarner are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BorgWarner may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Minerals Technologies and BorgWarner

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

The idea behind Minerals Technologies and BorgWarner 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.