Correlation Between NN and 3M
Can any of the company-specific risk be diversified away by investing in both NN and 3M 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 NN and 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NN Inc and 3M Company, you can compare the effects of market volatilities on NN and 3M 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 NN with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN and 3M.
Diversification Opportunities for NN and 3M
Modest diversification
The 3 months correlation between NN and 3M is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NN Inc and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and NN 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 NN Inc are associated (or correlated) with 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of NN i.e., NN and 3M go up and down completely randomly.
Pair Corralation between NN and 3M
Given the investment horizon of 90 days NN Inc is expected to generate 2.61 times more return on investment than 3M. However, NN is 2.61 times more volatile than 3M Company. It trades about 0.02 of its potential returns per unit of risk. 3M Company is currently generating about -0.05 per unit of risk. If you would invest 397.00 in NN Inc on September 13, 2024 and sell it today you would earn a total of 0.00 from holding NN Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NN Inc vs. 3M Company
Performance |
| Timeline |
| NN Inc |
| 3M Company |
NN and 3M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NN and 3M
The main advantage of trading using opposite NN and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN position performs unexpectedly, 3M 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 3M will offset losses from the drop in 3M's long position.| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
| 3M vs. Vast Renewables Limited | 3M vs. 1847 Holdings LLC | 3M vs. Westport Fuel Systems | 3M vs. Falcons Beyond Global, |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |