Correlation Between Alliance Global and 3M
Can any of the company-specific risk be diversified away by investing in both Alliance Global and 3M 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 Alliance Global and 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Global Group and 3M Company, you can compare the effects of market volatilities on Alliance Global and 3M 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 Alliance Global with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Global and 3M.
Diversification Opportunities for Alliance Global and 3M
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alliance and 3M is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Global Group and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and Alliance Global 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 Alliance Global Group are associated (or correlated) with 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of Alliance Global i.e., Alliance Global and 3M go up and down completely randomly.
Pair Corralation between Alliance Global and 3M
Assuming the 90 days horizon Alliance Global Group is expected to under-perform the 3M. In addition to that, Alliance Global is 3.1 times more volatile than 3M Company. It trades about -0.08 of its total potential returns per unit of risk. 3M Company is currently generating about 0.34 per unit of volatility. If you would invest 12,906 in 3M Company on December 2, 2024 and sell it today you would earn a total of 2,606 from holding 3M Company or generate 20.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alliance Global Group vs. 3M Company
Performance |
Timeline |
Alliance Global Group |
3M Company |
Alliance Global and 3M Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alliance Global and 3M
The main advantage of trading using opposite Alliance Global and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Global position performs unexpectedly, 3M 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 3M will offset losses from the drop in 3M's long position.Alliance Global vs. Alliance Recovery | Alliance Global vs. Ayala | Alliance Global vs. Alaska Power Telephone | Alliance Global vs. RCABS Inc |
3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |