Correlation Between 3M and Solarmax Technology
Can any of the company-specific risk be diversified away by investing in both 3M and Solarmax 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 Solarmax 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 Solarmax Technology Common, you can compare the effects of market volatilities on 3M and Solarmax 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 Solarmax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Solarmax Technology.
Diversification Opportunities for 3M and Solarmax Technology
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between 3M and Solarmax is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Solarmax Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solarmax 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 Solarmax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solarmax Technology has no effect on the direction of 3M i.e., 3M and Solarmax Technology go up and down completely randomly.
Pair Corralation between 3M and Solarmax Technology
Considering the 90-day investment horizon 3M Company is expected to under-perform the Solarmax Technology. But the stock apears to be less risky and, when comparing its historical volatility, 3M Company is 1.41 times less risky than Solarmax Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Solarmax Technology Common is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 120.00 in Solarmax Technology Common on January 9, 2025 and sell it today you would lose (6.00) from holding Solarmax Technology Common or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Solarmax Technology Common
Performance |
| Timeline |
| 3M Company |
| Solarmax Technology |
3M and Solarmax Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Solarmax Technology
The main advantage of trading using opposite 3M and Solarmax Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Solarmax 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 Solarmax Technology will offset losses from the drop in Solarmax Technology's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Solarmax Technology vs. Broadleaf Co | Solarmax Technology vs. Nathans Famous | Solarmax Technology vs. McDonalds | Solarmax Technology vs. Texas Roadhouse |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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