Correlation Between 3M and Digital Health
Can any of the company-specific risk be diversified away by investing in both 3M and Digital Health 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 Digital Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Digital Health Acquisition, you can compare the effects of market volatilities on 3M and Digital Health 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 Digital Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Digital Health.
Diversification Opportunities for 3M and Digital Health
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Digital is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Digital Health Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Health Acqui 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 Digital Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Health Acqui has no effect on the direction of 3M i.e., 3M and Digital Health go up and down completely randomly.
Pair Corralation between 3M and Digital Health
If you would invest 12,960 in 3M Company on August 29, 2024 and sell it today you would earn a total of 436.00 from holding 3M Company or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
3M Company vs. Digital Health Acquisition
Performance |
| Timeline |
| 3M Company |
| Digital Health Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Digital Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Digital Health
The main advantage of trading using opposite 3M and Digital Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Digital Health 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 Digital Health will offset losses from the drop in Digital Health's long position.The idea behind 3M Company and Digital Health Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Digital Health vs. Insight Acquisition Corp | Digital Health vs. AlphaVest Acquisition Corp | Digital Health vs. Oak Woods Acquisition | Digital Health vs. Insight Acquisition Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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