Correlation Between 3M and Marubeni
Can any of the company-specific risk be diversified away by investing in both 3M and Marubeni 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 Marubeni into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Marubeni, you can compare the effects of market volatilities on 3M and Marubeni 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 Marubeni. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Marubeni.
Diversification Opportunities for 3M and Marubeni
Very weak diversification
The 3 months correlation between 3M and Marubeni is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni 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 Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of 3M i.e., 3M and Marubeni go up and down completely randomly.
Pair Corralation between 3M and Marubeni
Considering the 90-day investment horizon 3M Company is expected to generate 0.75 times more return on investment than Marubeni. However, 3M Company is 1.34 times less risky than Marubeni. It trades about 0.08 of its potential returns per unit of risk. Marubeni is currently generating about 0.03 per unit of risk. If you would invest 7,902 in 3M Company on August 29, 2024 and sell it today you would earn a total of 5,393 from holding 3M Company or generate 68.25% 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. Marubeni
Performance |
| Timeline |
| 3M Company |
| Marubeni |
3M and Marubeni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Marubeni
The main advantage of trading using opposite 3M and Marubeni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Marubeni 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 Marubeni will offset losses from the drop in Marubeni's long position.| 3M vs. Vast Renewables Limited | 3M vs. 1847 Holdings LLC | 3M vs. Westport Fuel Systems | 3M vs. Brookfield Business Partners |
| Marubeni vs. Marubeni Corp ADR | Marubeni vs. Mitsubishi Corp | Marubeni vs. Sumitomo Corp ADR | Marubeni vs. Itochu Corp ADR |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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