Correlation Between 3M and Auxly Cannabis
Can any of the company-specific risk be diversified away by investing in both 3M and Auxly Cannabis 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 Auxly Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Auxly Cannabis Group, you can compare the effects of market volatilities on 3M and Auxly Cannabis 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 Auxly Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Auxly Cannabis.
Diversification Opportunities for 3M and Auxly Cannabis
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Auxly is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Auxly Cannabis Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxly Cannabis Group 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 Auxly Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxly Cannabis Group has no effect on the direction of 3M i.e., 3M and Auxly Cannabis go up and down completely randomly.
Pair Corralation between 3M and Auxly Cannabis
Considering the 90-day investment horizon 3M Company is expected to generate 0.28 times more return on investment than Auxly Cannabis. However, 3M Company is 3.62 times less risky than Auxly Cannabis. It trades about 0.13 of its potential returns per unit of risk. Auxly Cannabis Group is currently generating about -0.03 per unit of risk. If you would invest 12,689 in 3M Company on August 31, 2024 and sell it today you would earn a total of 559.00 from holding 3M Company or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Auxly Cannabis Group
Performance |
| Timeline |
| 3M Company |
| Auxly Cannabis Group |
3M and Auxly Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Auxly Cannabis
The main advantage of trading using opposite 3M and Auxly Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Auxly Cannabis 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 Auxly Cannabis will offset losses from the drop in Auxly Cannabis' long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Auxly Cannabis vs. C21 Investments | Auxly Cannabis vs. Delta 9 Cannabis | Auxly Cannabis vs. Halo Collective | Auxly Cannabis vs. Willow Biosciences |
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 Stocks Directory module to find actively traded stocks across global markets.
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