Correlation Between Minerals Technologies and Stepan
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies and Stepan 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 Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and Stepan Company, you can compare the effects of market volatilities on Minerals Technologies and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and Stepan.
Diversification Opportunities for Minerals Technologies and Stepan
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Minerals and Stepan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Minerals Technologies i.e., Minerals Technologies and Stepan go up and down completely randomly.
Pair Corralation between Minerals Technologies and Stepan
Considering the 90-day investment horizon Minerals Technologies is expected to under-perform the Stepan. In addition to that, Minerals Technologies is 1.02 times more volatile than Stepan Company. It trades about -0.1 of its total potential returns per unit of risk. Stepan Company is currently generating about -0.02 per unit of volatility. If you would invest 5,751 in Stepan Company on March 21, 2025 and sell it today you would lose (327.00) from holding Stepan Company or give up 5.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minerals Technologies vs. Stepan Company
Performance |
| Timeline |
| Minerals Technologies |
| Stepan Company |
Minerals Technologies and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and Stepan
The main advantage of trading using opposite Minerals Technologies and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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