Correlation Between 3M and Wilshire International
Can any of the company-specific risk be diversified away by investing in both 3M and Wilshire International 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 Wilshire International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Wilshire International Equity, you can compare the effects of market volatilities on 3M and Wilshire International 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 Wilshire International. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Wilshire International.
Diversification Opportunities for 3M and Wilshire International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3M and Wilshire is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Wilshire International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilshire International 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 Wilshire International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilshire International has no effect on the direction of 3M i.e., 3M and Wilshire International go up and down completely randomly.
Pair Corralation between 3M and Wilshire International
Considering the 90-day investment horizon 3M Company is expected to generate 2.86 times more return on investment than Wilshire International. However, 3M is 2.86 times more volatile than Wilshire International Equity. It trades about 0.11 of its potential returns per unit of risk. Wilshire International Equity is currently generating about 0.1 per unit of risk. If you would invest 7,440 in 3M Company on September 1, 2024 and sell it today you would earn a total of 5,913 from holding 3M Company or generate 79.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
3M Company vs. Wilshire International Equity
Performance |
| Timeline |
| 3M Company |
| Wilshire International |
3M and Wilshire International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Wilshire International
The main advantage of trading using opposite 3M and Wilshire International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Wilshire International 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 Wilshire International will offset losses from the drop in Wilshire International'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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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