Correlation Between H B and Minerals Technologies

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

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

Diversification Opportunities for H B and Minerals Technologies

0.0

Correlation Coefficient

H B  Minerals Technologies

Pay attention - limited upside

The 3 months correlation between FUL and Minerals is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and H B 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 H B Fuller 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 H B i.e., H B and Minerals Technologies go up and down completely randomly.

Pair Corralation between H B and Minerals Technologies

Considering the 90-day investment horizon H B Fuller is expected to under-perform the Minerals Technologies. But the stock apears to be less risky and, when comparing its historical volatility, H B Fuller is 1.48 times less risky than Minerals Technologies. The stock trades about -0.7 of its potential returns per unit of risk. The Minerals Technologies is currently generating about -0.36 of returns per unit of risk over similar time horizon. If you would invest  8,460  in Minerals Technologies on September 26, 2024 and sell it today you would lose (855.00) from holding Minerals Technologies or give up 10.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

H B Fuller  vs.  Minerals Technologies

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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

0 of 100

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.

Pair Trading with H B and Minerals Technologies

The main advantage of trading using opposite H B and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H B 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 H B Fuller 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.