Correlation Between 3M and 74368CBJ2

Can any of the company-specific risk be diversified away by investing in both 3M and 74368CBJ2 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 3M and 74368CBJ2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3M Company and PL 1646 13 JAN 25, you can compare the effects of market volatilities on 3M and 74368CBJ2 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 3M with a short position of 74368CBJ2. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and 74368CBJ2.

Diversification Opportunities for 3M and 74368CBJ2

-0.45

Correlation Coefficient

3M  74368CBJ2

Very good diversification

The 3 months correlation between 3M and 74368CBJ2 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and PL 1646 13 JAN 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PL 1646 13 and 3M 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 3M Company are associated (or correlated) with 74368CBJ2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PL 1646 13 has no effect on the direction of 3M i.e., 3M and 74368CBJ2 go up and down completely randomly.

Pair Corralation between 3M and 74368CBJ2

Considering the 90-day investment horizon 3M Company is expected to generate 1.61 times more return on investment than 74368CBJ2. However, 3M is 1.61 times more volatile than PL 1646 13 JAN 25. It trades about -0.01 of its potential returns per unit of risk. PL 1646 13 JAN 25 is currently generating about -0.11 per unit of risk. If you would invest  13,133  in 3M Company on September 12, 2024 and sell it today you would lose (140.00) from holding 3M Company or give up 1.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	42.19%
Values	Daily Returns

3M Company  vs.  PL 1646 13 JAN 25

3M Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 3M Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, 3M is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

PL 1646 13

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PL 1646 13 JAN 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 74368CBJ2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 3M and 74368CBJ2

The main advantage of trading using opposite 3M and 74368CBJ2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, 74368CBJ2 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 74368CBJ2 will offset losses from the drop in 74368CBJ2's long position.

The idea behind 3M Company and PL 1646 13 JAN 25 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.