Correlation Between 3M and Home Capital
Can any of the company-specific risk be diversified away by investing in both 3M and Home Capital 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 Home Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Home Capital Group, you can compare the effects of market volatilities on 3M and Home Capital 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 Home Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Home Capital.
Diversification Opportunities for 3M and Home Capital
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Home is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Home Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Capital Group 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 Home Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Capital Group has no effect on the direction of 3M i.e., 3M and Home Capital go up and down completely randomly.
Pair Corralation between 3M and Home Capital
If you would invest 12,859 in 3M Company on August 30, 2024 and sell it today you would earn a total of 389.00 from holding 3M Company or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
3M Company vs. Home Capital Group
Performance |
| Timeline |
| 3M Company |
| Home Capital Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Home Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Home Capital
The main advantage of trading using opposite 3M and Home Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Home Capital 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 Home Capital will offset losses from the drop in Home Capital's long position.| 3M vs. Griffon | 3M vs. Aquagold International | 3M vs. Thrivent High Yield | 3M vs. Morningstar Unconstrained Allocation |
| Home Capital vs. Guild Holdings Co | Home Capital vs. Rocket Companies | Home Capital vs. UWM Holdings Corp | Home Capital vs. Mr Cooper Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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