Correlation Between 3M and Rafarma Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both 3M and Rafarma Pharmaceuticals 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 Rafarma Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Rafarma Pharmaceuticals, you can compare the effects of market volatilities on 3M and Rafarma Pharmaceuticals 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 Rafarma Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Rafarma Pharmaceuticals.
Diversification Opportunities for 3M and Rafarma Pharmaceuticals
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 3M and Rafarma is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Rafarma Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafarma Pharmaceuticals 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 Rafarma Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafarma Pharmaceuticals has no effect on the direction of 3M i.e., 3M and Rafarma Pharmaceuticals go up and down completely randomly.
Pair Corralation between 3M and Rafarma Pharmaceuticals
Considering the 90-day investment horizon 3M Company is expected to generate 0.19 times more return on investment than Rafarma Pharmaceuticals. However, 3M Company is 5.38 times less risky than Rafarma Pharmaceuticals. It trades about 0.16 of its potential returns per unit of risk. Rafarma Pharmaceuticals is currently generating about -0.08 per unit of risk. If you would invest 12,655 in 3M Company on September 2, 2024 and sell it today you would earn a total of 698.00 from holding 3M Company or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Rafarma Pharmaceuticals
Performance |
| Timeline |
| 3M Company |
| Rafarma Pharmaceuticals |
3M and Rafarma Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Rafarma Pharmaceuticals
The main advantage of trading using opposite 3M and Rafarma Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Rafarma Pharmaceuticals 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 Rafarma Pharmaceuticals will offset losses from the drop in Rafarma Pharmaceuticals' long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Rafarma Pharmaceuticals vs. Holloman Energy Corp | Rafarma Pharmaceuticals vs. cbdMD Inc | Rafarma Pharmaceuticals vs. Evolus Inc | Rafarma Pharmaceuticals vs. CV Sciences |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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