Correlation Between 3M and Cliffwater Corporate
Can any of the company-specific risk be diversified away by investing in both 3M and Cliffwater Corporate 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 Cliffwater Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Cliffwater Corporate Lending, you can compare the effects of market volatilities on 3M and Cliffwater Corporate 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 Cliffwater Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Cliffwater Corporate.
Diversification Opportunities for 3M and Cliffwater Corporate
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Cliffwater is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Cliffwater Corporate Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cliffwater Corporate 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 Cliffwater Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cliffwater Corporate has no effect on the direction of 3M i.e., 3M and Cliffwater Corporate go up and down completely randomly.
Pair Corralation between 3M and Cliffwater Corporate
Considering the 90-day investment horizon 3M Company is expected to generate 29.61 times more return on investment than Cliffwater Corporate. However, 3M is 29.61 times more volatile than Cliffwater Corporate Lending. It trades about 0.13 of its potential returns per unit of risk. Cliffwater Corporate Lending is currently generating about 0.69 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. Cliffwater Corporate Lending
Performance |
| Timeline |
| 3M Company |
| Cliffwater Corporate |
3M and Cliffwater Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Cliffwater Corporate
The main advantage of trading using opposite 3M and Cliffwater Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Cliffwater Corporate 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 Cliffwater Corporate will offset losses from the drop in Cliffwater Corporate's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Cliffwater Corporate vs. Alphacentric Lifesci Healthcare | Cliffwater Corporate vs. Baron Health Care | Cliffwater Corporate vs. The Gabelli Healthcare | Cliffwater Corporate vs. Fidelity Advisor Health |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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