Correlation Between 3M and NESNVX

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

By analyzing existing cross correlation between 3M Company and NESNVX 625 15 JAN 26, you can compare the effects of market volatilities on 3M and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and NESNVX.

Diversification Opportunities for 3M and NESNVX

-0.38

Correlation Coefficient

3M  NESNVX

Very good diversification

The 3 months correlation between 3M and NESNVX is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and NESNVX 625 15 JAN 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 625 15 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 625 15 has no effect on the direction of 3M i.e., 3M and NESNVX go up and down completely randomly.

Pair Corralation between 3M and NESNVX

Considering the 90-day investment horizon 3M Company is expected to generate 4.36 times more return on investment than NESNVX. However, 3M is 4.36 times more volatile than NESNVX 625 15 JAN 26. It trades about 0.1 of its potential returns per unit of risk. NESNVX 625 15 JAN 26 is currently generating about -0.03 per unit of risk. If you would invest  7,844  in 3M Company on September 21, 2024 and sell it today you would earn a total of  4,869  from holding 3M Company or generate 62.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.78%
Values	Daily Returns

3M Company  vs.  NESNVX 625 15 JAN 26

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.

NESNVX 625 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 625 15 JAN 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 625 15 JAN 26 investors.

Pair Trading with 3M and NESNVX

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

The idea behind 3M Company and NESNVX 625 15 JAN 26 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.