Correlation Between Boeing and 3M
Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and 3M Company, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and 3M.
Diversification Opportunities for Boeing and 3M
Significant diversification
The 3 months correlation between Boeing and 3M is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and Boeing 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 The Boeing 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 Boeing i.e., Boeing and 3M go up and down completely randomly.
Pair Corralation between Boeing and 3M
Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.86 times more return on investment than 3M. However, Boeing is 1.86 times more volatile than 3M Company. It trades about 0.22 of its potential returns per unit of risk. 3M Company is currently generating about -0.07 per unit of risk. If you would invest 14,896 in The Boeing on September 12, 2024 and sell it today you would earn a total of 1,514 from holding The Boeing or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. 3M Company
Performance |
| Timeline |
| Boeing |
| 3M Company |
Boeing and 3M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and 3M
The main advantage of trading using opposite Boeing and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.| Boeing vs. Victory Integrity Smallmid Cap | Boeing vs. Hilton Worldwide Holdings | Boeing vs. NVIDIA | Boeing vs. JPMorgan Chase Co |
| 3M vs. Victory Integrity Smallmid Cap | 3M vs. Hilton Worldwide Holdings | 3M vs. NVIDIA | 3M vs. JPMorgan Chase Co |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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