Correlation Between Minerals Technologies and NewMarket

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

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

Diversification Opportunities for Minerals Technologies and NewMarket

-0.7

Correlation Coefficient

Minerals Technologies  NewMarket

Excellent diversification

The 3 months correlation between Minerals and NewMarket is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket 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 NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and NewMarket go up and down completely randomly.

Pair Corralation between Minerals Technologies and NewMarket

Considering the 90-day investment horizon Minerals Technologies is expected to under-perform the NewMarket. But the stock apears to be less risky and, when comparing its historical volatility, Minerals Technologies is 1.27 times less risky than NewMarket. The stock trades about -0.21 of its potential returns per unit of risk. The NewMarket is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  52,937  in NewMarket on December 30, 2024 and sell it today you would earn a total of  2,280  from holding NewMarket or generate 4.31% return on investment over 90 days.

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

Minerals Technologies  vs.  NewMarket

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. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NewMarket

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NewMarket are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, NewMarket is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Minerals Technologies and NewMarket

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

The idea behind Minerals Technologies and NewMarket 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.