Correlation Between 3M and PAR Technology
Can any of the company-specific risk be diversified away by investing in both 3M and PAR Technology 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 PAR Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and PAR Technology, you can compare the effects of market volatilities on 3M and PAR Technology 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 PAR Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and PAR Technology.
Diversification Opportunities for 3M and PAR Technology
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and PAR is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR Technology 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 PAR Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR Technology has no effect on the direction of 3M i.e., 3M and PAR Technology go up and down completely randomly.
Pair Corralation between 3M and PAR Technology
Considering the 90-day investment horizon 3M is expected to generate 1.58 times less return on investment than PAR Technology. But when comparing it to its historical volatility, 3M Company is 1.43 times less risky than PAR Technology. It trades about 0.08 of its potential returns per unit of risk. PAR Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,671 in PAR Technology on August 31, 2024 and sell it today you would earn a total of 4,443 from holding PAR Technology or generate 121.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. PAR Technology
Performance |
| Timeline |
| 3M Company |
| PAR Technology |
3M and PAR Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and PAR Technology
The main advantage of trading using opposite 3M and PAR Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, PAR Technology 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 PAR Technology will offset losses from the drop in PAR Technology's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| PAR Technology vs. CS Disco LLC | PAR Technology vs. PROS Holdings | PAR Technology vs. Meridianlink | PAR Technology vs. Enfusion |
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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