Correlation Between 3M and Sterling Check
Can any of the company-specific risk be diversified away by investing in both 3M and Sterling Check 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 Sterling Check into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Sterling Check Corp, you can compare the effects of market volatilities on 3M and Sterling Check 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 Sterling Check. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Sterling Check.
Diversification Opportunities for 3M and Sterling Check
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 3M and Sterling is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Sterling Check Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Check Corp 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 Sterling Check. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Check Corp has no effect on the direction of 3M i.e., 3M and Sterling Check go up and down completely randomly.
Pair Corralation between 3M and Sterling Check
Considering the 90-day investment horizon 3M Company is expected to generate 0.89 times more return on investment than Sterling Check. However, 3M Company is 1.12 times less risky than Sterling Check. It trades about -0.06 of its potential returns per unit of risk. Sterling Check Corp is currently generating about -0.14 per unit of risk. If you would invest 13,413 in 3M Company on September 20, 2024 and sell it today you would lose (608.00) from holding 3M Company or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 21.43% |
| Values | Daily Returns |
3M Company vs. Sterling Check Corp
Performance |
| Timeline |
| 3M Company |
| Sterling Check Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Sterling Check Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Sterling Check
The main advantage of trading using opposite 3M and Sterling Check positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Sterling Check 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 Sterling Check will offset losses from the drop in Sterling Check's long position.| 3M vs. Vast Renewables Limited | 3M vs. 1847 Holdings LLC | 3M vs. Westport Fuel Systems | 3M vs. Brookfield Business Partners |
| Sterling Check vs. EverCommerce | Sterling Check vs. Evertec | Sterling Check vs. Consensus Cloud Solutions | Sterling Check vs. CSG Systems International |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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