Correlation Between 3M and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both 3M and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Goldman Sachs Short, you can compare the effects of market volatilities on 3M and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Goldman Sachs.
Diversification Opportunities for 3M and Goldman Sachs
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 3M and Goldman is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Short has no effect on the direction of 3M i.e., 3M and Goldman Sachs go up and down completely randomly.
Pair Corralation between 3M and Goldman Sachs
Considering the 90-day investment horizon 3M Company is expected to generate 12.01 times more return on investment than Goldman Sachs. However, 3M is 12.01 times more volatile than Goldman Sachs Short. It trades about 0.04 of its potential returns per unit of risk. Goldman Sachs Short is currently generating about 0.12 per unit of risk. If you would invest 9,700 in 3M Company on September 3, 2024 and sell it today you would earn a total of 3,653 from holding 3M Company or generate 37.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Goldman Sachs Short
Performance |
| Timeline |
| 3M Company |
| Goldman Sachs Short |
3M and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Goldman Sachs
The main advantage of trading using opposite 3M and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Goldman Sachs vs. Wt Mutual Fund | Goldman Sachs vs. Transamerica Funds | Goldman Sachs vs. Matson Money Equity | Goldman Sachs vs. Lord Abbett Emerging |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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