Correlation Between 3M and Mitsui Co
Can any of the company-specific risk be diversified away by investing in both 3M and Mitsui Co 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 Mitsui Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Mitsui Co, you can compare the effects of market volatilities on 3M and Mitsui Co 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 Mitsui Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Mitsui Co.
Diversification Opportunities for 3M and Mitsui Co
Excellent diversification
The 3 months correlation between 3M and Mitsui is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Mitsui Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Co 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 Mitsui Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Co has no effect on the direction of 3M i.e., 3M and Mitsui Co go up and down completely randomly.
Pair Corralation between 3M and Mitsui Co
Considering the 90-day investment horizon 3M Company is expected to under-perform the Mitsui Co. But the stock apears to be less risky and, when comparing its historical volatility, 3M Company is 4.19 times less risky than Mitsui Co. The stock trades about -0.18 of its potential returns per unit of risk. The Mitsui Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,951 in Mitsui Co on November 27, 2024 and sell it today you would lose (101.00) from holding Mitsui Co or give up 5.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Mitsui Co
Performance |
| Timeline |
| 3M Company |
| Mitsui Co |
3M and Mitsui Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Mitsui Co
The main advantage of trading using opposite 3M and Mitsui Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Mitsui Co 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 Mitsui Co will offset losses from the drop in Mitsui Co's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Mitsui Co vs. ITOCHU | Mitsui Co vs. Sumitomo Corp ADR | Mitsui Co vs. Marubeni Corp ADR | Mitsui Co vs. Mitsubishi Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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