Correlation Between 3M and Smart Global
Can any of the company-specific risk be diversified away by investing in both 3M and Smart Global 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 Smart Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Smart Global Holdings, you can compare the effects of market volatilities on 3M and Smart Global 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 Smart Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Smart Global.
Diversification Opportunities for 3M and Smart Global
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between 3M and Smart is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Smart Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Global Holdings 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 Smart Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Global Holdings has no effect on the direction of 3M i.e., 3M and Smart Global go up and down completely randomly.
Pair Corralation between 3M and Smart Global
If you would invest 2,041 in Smart Global Holdings on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Smart Global Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
3M Company vs. Smart Global Holdings
Performance |
| Timeline |
| 3M Company |
| Smart Global Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
3M and Smart Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Smart Global
The main advantage of trading using opposite 3M and Smart Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Smart Global 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 Smart Global will offset losses from the drop in Smart Global's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Smart Global vs. Silicon Motion Technology | Smart Global vs. MACOM Technology Solutions | Smart Global vs. Semtech | Smart Global vs. Alpha and Omega |
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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