Correlation Between 3M and DGTL Holdings
Can any of the company-specific risk be diversified away by investing in both 3M and DGTL Holdings 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 DGTL Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and DGTL Holdings, you can compare the effects of market volatilities on 3M and DGTL Holdings 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 DGTL Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and DGTL Holdings.
Diversification Opportunities for 3M and DGTL Holdings
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 3M and DGTL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and DGTL Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTL Holdings 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 DGTL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTL Holdings has no effect on the direction of 3M i.e., 3M and DGTL Holdings go up and down completely randomly.
Pair Corralation between 3M and DGTL Holdings
Considering the 90-day investment horizon 3M is expected to generate 71.4 times less return on investment than DGTL Holdings. But when comparing it to its historical volatility, 3M Company is 36.64 times less risky than DGTL Holdings. It trades about 0.05 of its potential returns per unit of risk. DGTL Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 42.00 in DGTL Holdings on September 13, 2024 and sell it today you would lose (41.40) from holding DGTL Holdings or give up 98.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
3M Company vs. DGTL Holdings
Performance |
| Timeline |
| 3M Company |
| DGTL Holdings |
3M and DGTL Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and DGTL Holdings
The main advantage of trading using opposite 3M and DGTL Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, DGTL Holdings 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 DGTL Holdings will offset losses from the drop in DGTL Holdings' long position.| 3M vs. Vast Renewables Limited | 3M vs. 1847 Holdings LLC | 3M vs. Westport Fuel Systems | 3M vs. Falcons Beyond Global, |
| DGTL Holdings vs. Tinybeans Group Limited | DGTL Holdings vs. Sabio Holdings | DGTL Holdings vs. Zoomd Technologies | DGTL Holdings vs. Quizam Media |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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