Correlation Between 3M and Guggenheim Energy
Can any of the company-specific risk be diversified away by investing in both 3M and Guggenheim Energy 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 Guggenheim Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Guggenheim Energy Income, you can compare the effects of market volatilities on 3M and Guggenheim Energy 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 Guggenheim Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Guggenheim Energy.
Diversification Opportunities for 3M and Guggenheim Energy
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 3M and Guggenheim is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Guggenheim Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Energy Income 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 Guggenheim Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Energy Income has no effect on the direction of 3M i.e., 3M and Guggenheim Energy go up and down completely randomly.
Pair Corralation between 3M and Guggenheim Energy
If you would invest 12,960 in 3M Company on August 29, 2024 and sell it today you would earn a total of 288.00 from holding 3M Company or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
3M Company vs. Guggenheim Energy Income
Performance |
| Timeline |
| 3M Company |
| Guggenheim Energy Income |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Guggenheim Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Guggenheim Energy
The main advantage of trading using opposite 3M and Guggenheim Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Guggenheim Energy 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 Guggenheim Energy will offset losses from the drop in Guggenheim Energy's long position.The idea behind 3M Company and Guggenheim Energy Income 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.| Guggenheim Energy vs. Allianzgi Technology Fund | Guggenheim Energy vs. Towpath Technology | Guggenheim Energy vs. Janus Global Technology | Guggenheim Energy vs. Global Technology Portfolio |
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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