Correlation Between Minerals Technologies and KINDER

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

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

Diversification Opportunities for Minerals Technologies and KINDER

-0.27

Correlation Coefficient

Minerals Technologies  KINDER

Very good diversification

The 3 months correlation between Minerals and KINDER is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and KINDER MORGAN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN INC has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and KINDER go up and down completely randomly.

Pair Corralation between Minerals Technologies and KINDER

Considering the 90-day investment horizon Minerals Technologies is expected to generate 1.78 times more return on investment than KINDER. However, Minerals Technologies is 1.78 times more volatile than KINDER MORGAN INC. It trades about 0.01 of its potential returns per unit of risk. KINDER MORGAN INC is currently generating about -0.02 per unit of risk. If you would invest  7,614  in Minerals Technologies on October 2, 2024 and sell it today you would lose (12.00) from holding Minerals Technologies or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.13%
Values	Daily Returns

Minerals Technologies  vs.  KINDER MORGAN 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 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.

KINDER MORGAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Minerals Technologies and KINDER

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

The idea behind Minerals Technologies and KINDER MORGAN 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 Global Correlations module to find global opportunities by holding instruments from different markets.