Correlation Between Nuvalent and Minerals Technologies

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

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

Diversification Opportunities for Nuvalent and Minerals Technologies

-0.51

Correlation Coefficient

Nuvalent  Minerals Technologies

Excellent diversification

The 3 months correlation between Nuvalent and Minerals is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and Nuvalent 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 Nuvalent are associated (or correlated) with Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Nuvalent i.e., Nuvalent and Minerals Technologies go up and down completely randomly.

Pair Corralation between Nuvalent and Minerals Technologies

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Minerals Technologies. In addition to that, Nuvalent is 1.28 times more volatile than Minerals Technologies. It trades about -0.1 of its total potential returns per unit of risk. Minerals Technologies is currently generating about 0.07 per unit of volatility. If you would invest  7,357  in Minerals Technologies on September 19, 2024 and sell it today you would earn a total of  525.00  from holding Minerals Technologies or generate 7.14% return on investment over 90 days.

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

Nuvalent  vs.  Minerals Technologies

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Minerals Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 5 (%) 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.

Pair Trading with Nuvalent and Minerals Technologies

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

The idea behind Nuvalent and Minerals Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.