Correlation Between 3M and SOUTHERN
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By analyzing existing cross correlation between 3M Company and SOUTHERN CALIF EDISON, you can compare the effects of market volatilities on 3M and SOUTHERN 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 SOUTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and SOUTHERN.
Diversification Opportunities for 3M and SOUTHERN
Good diversification
The 3 months correlation between 3M and SOUTHERN is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and SOUTHERN CALIF EDISON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN CALIF EDISON 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN CALIF EDISON has no effect on the direction of 3M i.e., 3M and SOUTHERN go up and down completely randomly.
Pair Corralation between 3M and SOUTHERN
Considering the 90-day investment horizon 3M Company is expected to generate 0.48 times more return on investment than SOUTHERN. However, 3M Company is 2.1 times less risky than SOUTHERN. It trades about 0.19 of its potential returns per unit of risk. SOUTHERN CALIF EDISON is currently generating about -0.22 per unit of risk. If you would invest 12,518 in 3M Company on September 4, 2024 and sell it today you would earn a total of 771.00 from holding 3M Company or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.0% |
| Values | Daily Returns |
3M Company vs. SOUTHERN CALIF EDISON
Performance |
| Timeline |
| 3M Company |
| SOUTHERN CALIF EDISON |
3M and SOUTHERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and SOUTHERN
The main advantage of trading using opposite 3M and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, SOUTHERN 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 SOUTHERN will offset losses from the drop in SOUTHERN's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| SOUTHERN vs. Playtech plc | SOUTHERN vs. Dalata Hotel Group | SOUTHERN vs. Biglari Holdings | SOUTHERN vs. National CineMedia |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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