Correlation Between 3M and Atlantic Coastal
Can any of the company-specific risk be diversified away by investing in both 3M and Atlantic Coastal 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 Atlantic Coastal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Atlantic Coastal Acquisition, you can compare the effects of market volatilities on 3M and Atlantic Coastal 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 Atlantic Coastal. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Atlantic Coastal.
Diversification Opportunities for 3M and Atlantic Coastal
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 3M and Atlantic is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Atlantic Coastal Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Coastal Acq 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 Atlantic Coastal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Coastal Acq has no effect on the direction of 3M i.e., 3M and Atlantic Coastal go up and down completely randomly.
Pair Corralation between 3M and Atlantic Coastal
If you would invest 1,040 in Atlantic Coastal Acquisition on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Atlantic Coastal Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 2.33% |
| Values | Daily Returns |
3M Company vs. Atlantic Coastal Acquisition
Performance |
| Timeline |
| 3M Company |
| Atlantic Coastal Acq |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Atlantic Coastal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Atlantic Coastal
The main advantage of trading using opposite 3M and Atlantic Coastal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Atlantic Coastal 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 Atlantic Coastal will offset losses from the drop in Atlantic Coastal's long position.The idea behind 3M Company and Atlantic Coastal Acquisition 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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