Correlation Between 3M and BPCEGP

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Can any of the company-specific risk be diversified away by investing in both 3M and BPCEGP 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 BPCEGP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and BPCEGP 2045 19 OCT 27, you can compare the effects of market volatilities on 3M and BPCEGP 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 BPCEGP. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and BPCEGP.

Diversification Opportunities for 3M and BPCEGP

-0.45
  Correlation Coefficient
 3M

Very good diversification

The 3 months correlation between 3M and BPCEGP is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and BPCEGP 2045 19 OCT 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPCEGP 2045 19 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 BPCEGP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPCEGP 2045 19 has no effect on the direction of 3M i.e., 3M and BPCEGP go up and down completely randomly.

Pair Corralation between 3M and BPCEGP

Considering the 90-day investment horizon 3M Company is expected to generate 0.32 times more return on investment than BPCEGP. However, 3M Company is 3.15 times less risky than BPCEGP. It trades about 0.13 of its potential returns per unit of risk. BPCEGP 2045 19 OCT 27 is currently generating about -0.71 per unit of risk. If you would invest  12,689  in 3M Company on August 31, 2024 and sell it today you would earn a total of  559.00  from holding 3M Company or generate 4.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy9.09%
ValuesDaily Returns

3M Company  vs.  BPCEGP 2045 19 OCT 27

 Performance 
       Timeline  
3M Company 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, 3M is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.
BPCEGP 2045 19 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BPCEGP 2045 19 OCT 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for BPCEGP 2045 19 OCT 27 investors.

3M and BPCEGP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 3M and BPCEGP

The main advantage of trading using opposite 3M and BPCEGP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, BPCEGP 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 BPCEGP will offset losses from the drop in BPCEGP's long position.
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The idea behind 3M Company and BPCEGP 2045 19 OCT 27 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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