Correlation Between 3M and FORTIVE
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By analyzing existing cross correlation between 3M Company and FORTIVE P 43, you can compare the effects of market volatilities on 3M and FORTIVE 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 FORTIVE. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and FORTIVE.
Diversification Opportunities for 3M and FORTIVE
Excellent diversification
The 3 months correlation between 3M and FORTIVE is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and FORTIVE P 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORTIVE P 43 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 FORTIVE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORTIVE P 43 has no effect on the direction of 3M i.e., 3M and FORTIVE go up and down completely randomly.
Pair Corralation between 3M and FORTIVE
Considering the 90-day investment horizon 3M is expected to generate 61.66 times less return on investment than FORTIVE. But when comparing it to its historical volatility, 3M Company is 51.36 times less risky than FORTIVE. It trades about 0.07 of its potential returns per unit of risk. FORTIVE P 43 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,839 in FORTIVE P 43 on November 9, 2024 and sell it today you would earn a total of 405.00 from holding FORTIVE P 43 or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 43.41% |
| Values | Daily Returns |
3M Company vs. FORTIVE P 43
Performance |
| Timeline |
| 3M Company |
| FORTIVE P 43 |
3M and FORTIVE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and FORTIVE
The main advantage of trading using opposite 3M and FORTIVE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, FORTIVE 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 FORTIVE will offset losses from the drop in FORTIVE's long position.The idea behind 3M Company and FORTIVE P 43 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.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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