Correlation Between 3M and Invesco CurrencyShares
Can any of the company-specific risk be diversified away by investing in both 3M and Invesco CurrencyShares 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 Invesco CurrencyShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Invesco CurrencyShares Australian, you can compare the effects of market volatilities on 3M and Invesco CurrencyShares 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 Invesco CurrencyShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Invesco CurrencyShares.
Diversification Opportunities for 3M and Invesco CurrencyShares
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3M and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Invesco CurrencyShares Austral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CurrencyShares 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 Invesco CurrencyShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CurrencyShares has no effect on the direction of 3M i.e., 3M and Invesco CurrencyShares go up and down completely randomly.
Pair Corralation between 3M and Invesco CurrencyShares
Considering the 90-day investment horizon 3M Company is expected to generate 4.51 times more return on investment than Invesco CurrencyShares. However, 3M is 4.51 times more volatile than Invesco CurrencyShares Australian. It trades about 0.1 of its potential returns per unit of risk. Invesco CurrencyShares Australian is currently generating about -0.02 per unit of risk. If you would invest 9,763 in 3M Company on August 24, 2024 and sell it today you would earn a total of 2,969 from holding 3M Company or generate 30.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Invesco CurrencyShares Austral
Performance |
| Timeline |
| 3M Company |
| Invesco CurrencyShares |
3M and Invesco CurrencyShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Invesco CurrencyShares
The main advantage of trading using opposite 3M and Invesco CurrencyShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Invesco CurrencyShares 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 Invesco CurrencyShares will offset losses from the drop in Invesco CurrencyShares' long position.| 3M vs. Small Cap Core | 3M vs. FitLife Brands, Common | 3M vs. Mutual Of America | 3M vs. Gfl Environmental 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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