Correlation Between Minerals Technologies and GMS

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

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

Diversification Opportunities for Minerals Technologies and GMS

0.9

Correlation Coefficient

Minerals Technologies  GMS

Almost no diversification

The 3 months correlation between Minerals and GMS is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc 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 GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and GMS go up and down completely randomly.

Pair Corralation between Minerals Technologies and GMS

Considering the 90-day investment horizon Minerals Technologies is expected to generate 2.88 times less return on investment than GMS. But when comparing it to its historical volatility, Minerals Technologies is 1.05 times less risky than GMS. It trades about 0.02 of its potential returns per unit of risk. GMS Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,372  in GMS Inc on October 14, 2024 and sell it today you would earn a total of  2,636  from holding GMS Inc or generate 49.07% return on investment over 90 days.

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

Minerals Technologies  vs.  GMS Inc

Minerals Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minerals Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Minerals Technologies and GMS

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

The idea behind Minerals Technologies and GMS Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..