Correlation Between Cyrela Brazil and 3M

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

By analyzing existing cross correlation between Cyrela Brazil Realty and 3M Company, you can compare the effects of market volatilities on Cyrela Brazil 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 Cyrela Brazil with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyrela Brazil and 3M.

Diversification Opportunities for Cyrela Brazil and 3M

-0.73

Correlation Coefficient

Cyrela Brazil  3M

Pay attention - limited upside

The 3 months correlation between Cyrela and 3M is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cyrela Brazil Realty and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and Cyrela Brazil 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 Cyrela Brazil Realty 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 Cyrela Brazil i.e., Cyrela Brazil and 3M go up and down completely randomly.

Pair Corralation between Cyrela Brazil and 3M

Assuming the 90 days trading horizon Cyrela Brazil Realty is expected to under-perform the 3M. In addition to that, Cyrela Brazil is 2.37 times more volatile than 3M Company. It trades about -0.21 of its total potential returns per unit of risk. 3M Company is currently generating about 0.25 per unit of volatility. If you would invest  18,682  in 3M Company on September 16, 2024 and sell it today you would earn a total of  1,217  from holding 3M Company or generate 6.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cyrela Brazil Realty  vs.  3M Company

Cyrela Brazil Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyrela Brazil Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

3M Company

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, 3M may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cyrela Brazil and 3M

The main advantage of trading using opposite Cyrela Brazil and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cyrela Brazil 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.

The idea behind Cyrela Brazil Realty and 3M Company 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.