Correlation Between 3M and Orca Energy
Can any of the company-specific risk be diversified away by investing in both 3M and Orca 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 Orca 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 Orca Energy Group, you can compare the effects of market volatilities on 3M and Orca 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 Orca Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Orca Energy.
Diversification Opportunities for 3M and Orca Energy
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 3M and Orca is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Orca Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca Energy Group 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 Orca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca Energy Group has no effect on the direction of 3M i.e., 3M and Orca Energy go up and down completely randomly.
Pair Corralation between 3M and Orca Energy
Considering the 90-day investment horizon 3M Company is expected to under-perform the Orca Energy. But the stock apears to be less risky and, when comparing its historical volatility, 3M Company is 6.49 times less risky than Orca Energy. The stock trades about -0.18 of its potential returns per unit of risk. The Orca Energy Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 225.00 in Orca Energy Group on November 27, 2024 and sell it today you would lose (2.00) from holding Orca Energy Group or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Orca Energy Group
Performance |
| Timeline |
| 3M Company |
| Orca Energy Group |
3M and Orca Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Orca Energy
The main advantage of trading using opposite 3M and Orca Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Orca 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 Orca Energy will offset losses from the drop in Orca Energy's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Orca Energy vs. PetroShale | Orca Energy vs. Questerre Energy | Orca Energy vs. Petrus Resources | Orca Energy vs. Inpex 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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