Correlation Between 3M and Science
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By analyzing existing cross correlation between 3M Company and Science Applications International, you can compare the effects of market volatilities on 3M and Science 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 Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Science.
Diversification Opportunities for 3M and Science
Good diversification
The 3 months correlation between 3M and Science is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications 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 Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of 3M i.e., 3M and Science go up and down completely randomly.
Pair Corralation between 3M and Science
Considering the 90-day investment horizon 3M Company is expected to generate 3.56 times more return on investment than Science. However, 3M is 3.56 times more volatile than Science Applications International. It trades about 0.42 of its potential returns per unit of risk. Science Applications International is currently generating about 0.16 per unit of risk. If you would invest 13,453 in 3M Company on November 9, 2024 and sell it today you would earn a total of 1,779 from holding 3M Company or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.0% |
| Values | Daily Returns |
3M Company vs. Science Applications Internati
Performance |
| Timeline |
| 3M Company |
| Science Applications |
3M and Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Science
The main advantage of trading using opposite 3M and Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Science 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 Science will offset losses from the drop in Science's long position.The idea behind 3M Company and Science Applications International 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.| Science vs. Grocery Outlet Holding | Science vs. SunOpta | Science vs. Albertsons Companies | Science vs. Southern Home Medicl |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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