Correlation Between 3M and Sabre Gold
Can any of the company-specific risk be diversified away by investing in both 3M and Sabre Gold 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 Sabre Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Sabre Gold Mines, you can compare the effects of market volatilities on 3M and Sabre Gold 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 Sabre Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Sabre Gold.
Diversification Opportunities for 3M and Sabre Gold
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 3M and Sabre is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Sabre Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Gold Mines 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 Sabre Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Gold Mines has no effect on the direction of 3M i.e., 3M and Sabre Gold go up and down completely randomly.
Pair Corralation between 3M and Sabre Gold
Considering the 90-day investment horizon 3M Company is expected to generate 0.26 times more return on investment than Sabre Gold. However, 3M Company is 3.78 times less risky than Sabre Gold. It trades about 0.13 of its potential returns per unit of risk. Sabre Gold Mines is currently generating about 0.03 per unit of risk. If you would invest 12,779 in 3M Company on September 1, 2024 and sell it today you would earn a total of 574.00 from holding 3M Company or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
3M Company vs. Sabre Gold Mines
Performance |
| Timeline |
| 3M Company |
| Sabre Gold Mines |
3M and Sabre Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Sabre Gold
The main advantage of trading using opposite 3M and Sabre Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Sabre Gold 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 Sabre Gold will offset losses from the drop in Sabre Gold's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Sabre Gold vs. HUMANA INC | Sabre Gold vs. Aquagold International | Sabre Gold vs. Barloworld Ltd ADR | Sabre Gold vs. Thrivent High Yield |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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