Correlation Between 3M and United Bancorporation
Can any of the company-specific risk be diversified away by investing in both 3M and United Bancorporation 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 United Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and United Bancorporation of, you can compare the effects of market volatilities on 3M and United Bancorporation 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 United Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and United Bancorporation.
Diversification Opportunities for 3M and United Bancorporation
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and United is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation 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 United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of 3M i.e., 3M and United Bancorporation go up and down completely randomly.
Pair Corralation between 3M and United Bancorporation
Considering the 90-day investment horizon 3M is expected to generate 1.53 times less return on investment than United Bancorporation. In addition to that, 3M is 1.1 times more volatile than United Bancorporation of. It trades about 0.04 of its total potential returns per unit of risk. United Bancorporation of is currently generating about 0.07 per unit of volatility. If you would invest 3,559 in United Bancorporation of on August 28, 2024 and sell it today you would earn a total of 2,341 from holding United Bancorporation of or generate 65.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.69% |
| Values | Daily Returns |
3M Company vs. United Bancorp. of
Performance |
| Timeline |
| 3M Company |
| United Bancorporation |
3M and United Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and United Bancorporation
The main advantage of trading using opposite 3M and United Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, United Bancorporation 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 United Bancorporation will offset losses from the drop in United Bancorporation's long position.| 3M vs. Vast Renewables Limited | 3M vs. 1847 Holdings LLC | 3M vs. Westport Fuel Systems | 3M vs. Brookfield Business Partners |
| United Bancorporation vs. MF Bancorp | United Bancorporation vs. Merchants Marine Bancorp | United Bancorporation vs. MNB Holdings Corp | United Bancorporation vs. Security Federal |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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