Correlation Between 3M and Masonite International
Can any of the company-specific risk be diversified away by investing in both 3M and Masonite International 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 Masonite International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Masonite International Corp, you can compare the effects of market volatilities on 3M and Masonite International 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 Masonite International. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Masonite International.
Diversification Opportunities for 3M and Masonite International
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Masonite is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Masonite International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masonite International 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 Masonite International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masonite International has no effect on the direction of 3M i.e., 3M and Masonite International go up and down completely randomly.
Pair Corralation between 3M and Masonite International
If you would invest 12,960 in 3M Company on August 28, 2024 and sell it today you would earn a total of 72.00 from holding 3M Company or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
3M Company vs. Masonite International Corp
Performance |
| Timeline |
| 3M Company |
| Masonite International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Masonite International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Masonite International
The main advantage of trading using opposite 3M and Masonite International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Masonite International 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 Masonite International will offset losses from the drop in Masonite International's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Masonite International vs. Jeld Wen Holding | Masonite International vs. Installed Building Products | Masonite International vs. Armstrong World Industries | Masonite International vs. GMS Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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