Correlation Between 3M and RILIN

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

By analyzing existing cross correlation between 3M Company and RILIN 2875 12 JAN 32, you can compare the effects of market volatilities on 3M and RILIN 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 RILIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and RILIN.

Diversification Opportunities for 3M and RILIN

-0.31

Correlation Coefficient

3M  RILIN

Very good diversification

The 3 months correlation between 3M and RILIN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and RILIN 2875 12 JAN 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RILIN 2875 12 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 RILIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RILIN 2875 12 has no effect on the direction of 3M i.e., 3M and RILIN go up and down completely randomly.

Pair Corralation between 3M and RILIN

Considering the 90-day investment horizon 3M Company is expected to generate 1.76 times more return on investment than RILIN. However, 3M is 1.76 times more volatile than RILIN 2875 12 JAN 32. It trades about -0.06 of its potential returns per unit of risk. RILIN 2875 12 JAN 32 is currently generating about -0.24 per unit of risk. If you would invest  13,492  in 3M Company on September 21, 2024 and sell it today you would lose (779.00) from holding 3M Company or give up 5.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.03%
Values	Daily Returns

3M Company  vs.  RILIN 2875 12 JAN 32

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 latest stock price disarray, may contribute to short-term losses for the investors.

RILIN 2875 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RILIN 2875 12 JAN 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for RILIN 2875 12 JAN 32 investors.

Pair Trading with 3M and RILIN

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

The idea behind 3M Company and RILIN 2875 12 JAN 32 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .