Correlation Between 3M and UNION
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By analyzing existing cross correlation between 3M Company and UNION ELEC 4, you can compare the effects of market volatilities on 3M and UNION 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 UNION. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and UNION.
Diversification Opportunities for 3M and UNION
Very good diversification
The 3 months correlation between 3M and UNION is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and UNION ELEC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNION ELEC 4 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 UNION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNION ELEC 4 has no effect on the direction of 3M i.e., 3M and UNION go up and down completely randomly.
Pair Corralation between 3M and UNION
Considering the 90-day investment horizon 3M is expected to generate 244.83 times less return on investment than UNION. But when comparing it to its historical volatility, 3M Company is 77.0 times less risky than UNION. It trades about 0.04 of its potential returns per unit of risk. UNION ELEC 4 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 8,631 in UNION ELEC 4 on September 3, 2024 and sell it today you would lose (567.00) from holding UNION ELEC 4 or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 53.94% |
| Values | Daily Returns |
3M Company vs. UNION ELEC 4
Performance |
| Timeline |
| 3M Company |
| UNION ELEC 4 |
3M and UNION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and UNION
The main advantage of trading using opposite 3M and UNION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, UNION 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 UNION will offset losses from the drop in UNION's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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