Correlation Between 3M and IShares Energy
Can any of the company-specific risk be diversified away by investing in both 3M and IShares Energy 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 IShares Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and iShares Energy Storage, you can compare the effects of market volatilities on 3M and IShares Energy 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 IShares Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and IShares Energy.
Diversification Opportunities for 3M and IShares Energy
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3M and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and iShares Energy Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Energy Storage 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 IShares Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Energy Storage has no effect on the direction of 3M i.e., 3M and IShares Energy go up and down completely randomly.
Pair Corralation between 3M and IShares Energy
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 Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
3M Company vs. iShares Energy Storage
Performance |
| Timeline |
| 3M Company |
| iShares Energy Storage |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and IShares Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and IShares Energy
The main advantage of trading using opposite 3M and IShares Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, IShares Energy 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 IShares Energy will offset losses from the drop in IShares Energy's long position.| 3M vs. Griffon | 3M vs. Aquagold International | 3M vs. Thrivent High Yield | 3M vs. Morningstar Unconstrained Allocation |
| IShares Energy vs. Freedom Day Dividend | IShares Energy vs. Franklin Templeton ETF | IShares Energy vs. iShares MSCI China | IShares Energy vs. Tidal Trust II |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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