Correlation Between 3M and Integrated Media
Can any of the company-specific risk be diversified away by investing in both 3M and Integrated Media 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 Integrated Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Integrated Media Technology, you can compare the effects of market volatilities on 3M and Integrated Media 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 Integrated Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Integrated Media.
Diversification Opportunities for 3M and Integrated Media
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Integrated is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Integrated Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Media Tec 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 Integrated Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Media Tec has no effect on the direction of 3M i.e., 3M and Integrated Media go up and down completely randomly.
Pair Corralation between 3M and Integrated Media
Considering the 90-day investment horizon 3M Company is expected to generate 0.28 times more return on investment than Integrated Media. However, 3M Company is 3.51 times less risky than Integrated Media. It trades about 0.13 of its potential returns per unit of risk. Integrated Media Technology is currently generating about -0.36 per unit of risk. If you would invest 12,689 in 3M Company on August 31, 2024 and sell it today you would earn a total of 559.00 from holding 3M Company or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Integrated Media Technology
Performance |
| Timeline |
| 3M Company |
| Integrated Media Tec |
3M and Integrated Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Integrated Media
The main advantage of trading using opposite 3M and Integrated Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Integrated Media 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 Integrated Media will offset losses from the drop in Integrated Media's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Integrated Media vs. SigmaTron International | Integrated Media vs. Data IO | Integrated Media vs. Research Frontiers Incorporated | Integrated Media vs. Maris Tech |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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