Correlation Between 3M and 694308KJ5

Can any of the company-specific risk be diversified away by investing in both 3M and 694308KJ5 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 694308KJ5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3M Company and PCG 615 15 JAN 33, you can compare the effects of market volatilities on 3M and 694308KJ5 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 694308KJ5. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and 694308KJ5.

Diversification Opportunities for 3M and 694308KJ5

0.49

Correlation Coefficient

3M  694308KJ5

Very weak diversification

The 3 months correlation between 3M and 694308KJ5 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and PCG 615 15 JAN 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCG 615 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 694308KJ5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCG 615 15 has no effect on the direction of 3M i.e., 3M and 694308KJ5 go up and down completely randomly.

Pair Corralation between 3M and 694308KJ5

Considering the 90-day investment horizon 3M Company is expected to generate 1.41 times more return on investment than 694308KJ5. However, 3M is 1.41 times more volatile than PCG 615 15 JAN 33. It trades about -0.02 of its potential returns per unit of risk. PCG 615 15 JAN 33 is currently generating about -0.12 per unit of risk. If you would invest  13,398  in 3M Company on October 8, 2024 and sell it today you would lose (369.00) from holding 3M Company or give up 2.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.32%
Values	Daily Returns

3M Company  vs.  PCG 615 15 JAN 33

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

PCG 615 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 615 15 JAN 33 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 PCG 615 15 JAN 33 investors.

Pair Trading with 3M and 694308KJ5

The main advantage of trading using opposite 3M and 694308KJ5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, 694308KJ5 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 694308KJ5 will offset losses from the drop in 694308KJ5's long position.

The idea behind 3M Company and PCG 615 15 JAN 33 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.