Correlation Between 3M and Airports
Can any of the company-specific risk be diversified away by investing in both 3M and Airports 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 Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Airports Of Thailand, you can compare the effects of market volatilities on 3M and Airports 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 Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Airports.
Diversification Opportunities for 3M and Airports
Very good diversification
The 3 months correlation between 3M and Airports is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Airports Of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports Of Thailand 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 Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports Of Thailand has no effect on the direction of 3M i.e., 3M and Airports go up and down completely randomly.
Pair Corralation between 3M and Airports
Considering the 90-day investment horizon 3M Company is expected to generate 0.89 times more return on investment than Airports. However, 3M Company is 1.12 times less risky than Airports. It trades about 0.05 of its potential returns per unit of risk. Airports Of Thailand is currently generating about 0.02 per unit of risk. If you would invest 9,155 in 3M Company on September 13, 2024 and sell it today you would earn a total of 3,822 from holding 3M Company or generate 41.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.16% |
| Values | Daily Returns |
3M Company vs. Airports Of Thailand
Performance |
| Timeline |
| 3M Company |
| Airports Of Thailand |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
3M and Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Airports
The main advantage of trading using opposite 3M and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Airports 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 Airports will offset losses from the drop in Airports' long position.| 3M vs. Vast Renewables Limited | 3M vs. 1847 Holdings LLC | 3M vs. Westport Fuel Systems | 3M vs. Falcons Beyond Global, |
| Airports vs. Tarsus Pharmaceuticals | Airports vs. Hf Foods Group | Airports vs. BCB Bancorp | Airports vs. Centessa Pharmaceuticals PLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
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