Correlation Between 3M and Banner Acquisition
Can any of the company-specific risk be diversified away by investing in both 3M and Banner Acquisition 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 Banner Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Banner Acquisition Corp, you can compare the effects of market volatilities on 3M and Banner Acquisition 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 Banner Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Banner Acquisition.
Diversification Opportunities for 3M and Banner Acquisition
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Banner is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Banner Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banner Acquisition Corp 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 Banner Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banner Acquisition Corp has no effect on the direction of 3M i.e., 3M and Banner Acquisition go up and down completely randomly.
Pair Corralation between 3M and Banner Acquisition
Considering the 90-day investment horizon 3M Company is expected to generate 22.74 times more return on investment than Banner Acquisition. However, 3M is 22.74 times more volatile than Banner Acquisition Corp. It trades about 0.06 of its potential returns per unit of risk. Banner Acquisition Corp is currently generating about 0.19 per unit of risk. If you would invest 8,606 in 3M Company on September 1, 2024 and sell it today you would earn a total of 4,747 from holding 3M Company or generate 55.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 14.51% |
| Values | Daily Returns |
3M Company vs. Banner Acquisition Corp
Performance |
| Timeline |
| 3M Company |
| Banner Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Banner Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Banner Acquisition
The main advantage of trading using opposite 3M and Banner Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Banner Acquisition 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 Banner Acquisition will offset losses from the drop in Banner Acquisition's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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