Correlation Between Minerals Technologies and 191216CY4

Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and 191216CY4 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 191216CY4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Minerals Technologies and COCA COLA CO, you can compare the effects of market volatilities on Minerals Technologies and 191216CY4 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 191216CY4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and 191216CY4.

Diversification Opportunities for Minerals Technologies and 191216CY4

0.2

Correlation Coefficient

Minerals Technologies  191216CY4

Modest diversification

The 3 months correlation between Minerals and 191216CY4 is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216CY4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and 191216CY4 go up and down completely randomly.

Pair Corralation between Minerals Technologies and 191216CY4

Considering the 90-day investment horizon Minerals Technologies is not expected to generate positive returns. However, Minerals Technologies is 1.09 times less risky than 191216CY4. It waists most of its returns potential to compensate for thr risk taken. 191216CY4 is generating about 0.07 per unit of risk. If you would invest  6,165  in COCA COLA CO on October 26, 2024 and sell it today you would earn a total of  379.00  from holding COCA COLA CO or generate 6.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.14%
Values	Daily Returns

Minerals Technologies  vs.  COCA COLA CO

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 fairly strong basic indicators, Minerals Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

COCA A CO

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COCA COLA CO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 191216CY4 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Minerals Technologies and 191216CY4

The main advantage of trading using opposite Minerals Technologies and 191216CY4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, 191216CY4 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 191216CY4 will offset losses from the drop in 191216CY4's long position.

The idea behind Minerals Technologies and COCA COLA CO 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.