Correlation Between 3M and Western Alaska
Can any of the company-specific risk be diversified away by investing in both 3M and Western Alaska at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining 3M and Western Alaska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Western Alaska Minerals, you can compare the effects of market volatilities on 3M and Western Alaska 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 Western Alaska. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Western Alaska.
Diversification Opportunities for 3M and Western Alaska
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Western is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Western Alaska Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alaska Minerals 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 Western Alaska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alaska Minerals has no effect on the direction of 3M i.e., 3M and Western Alaska go up and down completely randomly.
Pair Corralation between 3M and Western Alaska
Considering the 90-day investment horizon 3M Company is expected to generate 0.25 times more return on investment than Western Alaska. However, 3M Company is 4.08 times less risky than Western Alaska. It trades about 0.55 of its potential returns per unit of risk. Western Alaska Minerals is currently generating about 0.11 per unit of risk. If you would invest 12,970 in 3M Company on November 3, 2024 and sell it today you would earn a total of 2,250 from holding 3M Company or generate 17.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
3M Company vs. Western Alaska Minerals
Performance |
| Timeline |
| 3M Company |
| Western Alaska Minerals |
3M and Western Alaska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Western Alaska
The main advantage of trading using opposite 3M and Western Alaska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Western Alaska 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 Western Alaska will offset losses from the drop in Western Alaska's long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Western Alaska vs. First Tellurium Corp | Western Alaska vs. Max Resource Corp | Western Alaska vs. P2 Gold | Western Alaska vs. CMC Metals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |