Correlation Between 3M and JPMorgan International
Can any of the company-specific risk be diversified away by investing in both 3M and JPMorgan International 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 JPMorgan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and JPMorgan International Growth, you can compare the effects of market volatilities on 3M and JPMorgan International 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 JPMorgan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and JPMorgan International.
Diversification Opportunities for 3M and JPMorgan International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3M and JPMorgan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and JPMorgan International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International 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 JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of 3M i.e., 3M and JPMorgan International go up and down completely randomly.
Pair Corralation between 3M and JPMorgan International
Considering the 90-day investment horizon 3M Company is expected to generate 1.5 times more return on investment than JPMorgan International. However, 3M is 1.5 times more volatile than JPMorgan International Growth. It trades about 0.04 of its potential returns per unit of risk. JPMorgan International Growth is currently generating about 0.0 per unit of risk. If you would invest 13,016 in 3M Company on September 2, 2024 and sell it today you would earn a total of 337.00 from holding 3M Company or generate 2.59% 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. JPMorgan International Growth
Performance |
| Timeline |
| 3M Company |
| JPMorgan International |
3M and JPMorgan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and JPMorgan International
The main advantage of trading using opposite 3M and JPMorgan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, JPMorgan International 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 JPMorgan International will offset losses from the drop in JPMorgan International's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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