Correlation Between 3M and Invesco BulletShares
Can any of the company-specific risk be diversified away by investing in both 3M and Invesco BulletShares 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 Invesco BulletShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Invesco BulletShares 2028, you can compare the effects of market volatilities on 3M and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Invesco BulletShares.
Diversification Opportunities for 3M and Invesco BulletShares
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3M and Invesco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Invesco BulletShares 2028 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2028 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 Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2028 has no effect on the direction of 3M i.e., 3M and Invesco BulletShares go up and down completely randomly.
Pair Corralation between 3M and Invesco BulletShares
Considering the 90-day investment horizon 3M Company is expected to generate 10.44 times more return on investment than Invesco BulletShares. However, 3M is 10.44 times more volatile than Invesco BulletShares 2028. It trades about 0.09 of its potential returns per unit of risk. Invesco BulletShares 2028 is currently generating about -0.06 per unit of risk. If you would invest 12,409 in 3M Company on August 26, 2024 and sell it today you would earn a total of 433.00 from holding 3M Company or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Invesco BulletShares 2028
Performance |
| Timeline |
| 3M Company |
| Invesco BulletShares 2028 |
3M and Invesco BulletShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Invesco BulletShares
The main advantage of trading using opposite 3M and Invesco BulletShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Invesco BulletShares 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 Invesco BulletShares will offset losses from the drop in Invesco BulletShares' long position.| 3M vs. Vast Renewables Limited | 3M vs. 1847 Holdings LLC | 3M vs. Westport Fuel Systems | 3M vs. Brookfield Business Partners |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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