Correlation Between 3M and Baylin Technologies
Can any of the company-specific risk be diversified away by investing in both 3M and Baylin Technologies 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 Baylin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Baylin Technologies, you can compare the effects of market volatilities on 3M and Baylin Technologies 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 Baylin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Baylin Technologies.
Diversification Opportunities for 3M and Baylin Technologies
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Baylin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies 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 Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of 3M i.e., 3M and Baylin Technologies go up and down completely randomly.
Pair Corralation between 3M and Baylin Technologies
Considering the 90-day investment horizon 3M is expected to generate 41.76 times less return on investment than Baylin Technologies. But when comparing it to its historical volatility, 3M Company is 29.04 times less risky than Baylin Technologies. It trades about 0.04 of its potential returns per unit of risk. Baylin Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Baylin Technologies on August 27, 2024 and sell it today you would earn a total of 7.00 from holding Baylin Technologies or generate 24.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Baylin Technologies
Performance |
| Timeline |
| 3M Company |
| Baylin Technologies |
3M and Baylin Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Baylin Technologies
The main advantage of trading using opposite 3M and Baylin Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Baylin Technologies 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 Baylin Technologies will offset losses from the drop in Baylin Technologies' long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Baylin Technologies vs. Metalert | Baylin Technologies vs. Viavi Solutions | Baylin Technologies vs. SatixFy Communications | Baylin Technologies vs. BK Technologies |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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