Correlation Between 3M and IndexIQ
Can any of the company-specific risk be diversified away by investing in both 3M and IndexIQ 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 IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and IndexIQ, you can compare the effects of market volatilities on 3M and IndexIQ 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 IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and IndexIQ.
Diversification Opportunities for 3M and IndexIQ
Very good diversification
The 3 months correlation between 3M and IndexIQ is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ 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 IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of 3M i.e., 3M and IndexIQ go up and down completely randomly.
Pair Corralation between 3M and IndexIQ
If you would invest 13,016 in 3M Company on September 2, 2024 and sell it today you would earn a total of 337.00 from holding 3M Company or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 1.56% |
| Values | Daily Returns |
3M Company vs. IndexIQ
Performance |
| Timeline |
| 3M Company |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and IndexIQ
The main advantage of trading using opposite 3M and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, IndexIQ 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 IndexIQ will offset losses from the drop in IndexIQ'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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |