Correlation Between 3M and ENB Financial
Can any of the company-specific risk be diversified away by investing in both 3M and ENB Financial 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 ENB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and ENB Financial Corp, you can compare the effects of market volatilities on 3M and ENB Financial 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 ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and ENB Financial.
Diversification Opportunities for 3M and ENB Financial
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and ENB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and ENB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENB Financial Corp 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 ENB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENB Financial Corp has no effect on the direction of 3M i.e., 3M and ENB Financial go up and down completely randomly.
Pair Corralation between 3M and ENB Financial
Considering the 90-day investment horizon 3M Company is expected to generate 0.82 times more return on investment than ENB Financial. However, 3M Company is 1.22 times less risky than ENB Financial. It trades about 0.11 of its potential returns per unit of risk. ENB Financial Corp is currently generating about 0.08 per unit of risk. If you would invest 7,122 in 3M Company on August 25, 2024 and sell it today you would earn a total of 5,720 from holding 3M Company or generate 80.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.5% |
| Values | Daily Returns |
3M Company vs. ENB Financial Corp
Performance |
| Timeline |
| 3M Company |
| ENB Financial Corp |
3M and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and ENB Financial
The main advantage of trading using opposite 3M and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, ENB Financial 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 ENB Financial will offset losses from the drop in ENB Financial's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| ENB Financial vs. Invesco High Income | ENB Financial vs. Blackrock Muniholdings Ny | ENB Financial vs. MFS Investment Grade | ENB Financial vs. Federated Premier Municipal |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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