Correlation Between 3M and BOEING
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By analyzing existing cross correlation between 3M Company and BOEING CO, you can compare the effects of market volatilities on 3M and BOEING 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 BOEING. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and BOEING.
Diversification Opportunities for 3M and BOEING
Very weak diversification
The 3 months correlation between 3M and BOEING is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and BOEING CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOEING CO 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 BOEING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOEING CO has no effect on the direction of 3M i.e., 3M and BOEING go up and down completely randomly.
Pair Corralation between 3M and BOEING
Considering the 90-day investment horizon 3M Company is expected to generate 5.53 times more return on investment than BOEING. However, 3M is 5.53 times more volatile than BOEING CO. It trades about 0.11 of its potential returns per unit of risk. BOEING CO is currently generating about 0.0 per unit of risk. If you would invest 8,698 in 3M Company on November 9, 2024 and sell it today you would earn a total of 6,534 from holding 3M Company or generate 75.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
3M Company vs. BOEING CO
Performance |
| Timeline |
| 3M Company |
| BOEING CO |
3M and BOEING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and BOEING
The main advantage of trading using opposite 3M and BOEING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, BOEING 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 BOEING will offset losses from the drop in BOEING's long position.The idea behind 3M Company and BOEING CO 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.| BOEING vs. Nathans Famous | BOEING vs. Pearson PLC ADR | BOEING vs. Cracker Barrel Old | BOEING vs. Starbucks |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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