Correlation Between NVIDIA and 3M
Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA and 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and 3M Company, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and 3M.
Diversification Opportunities for NVIDIA and 3M
Very good diversification
The 3 months correlation between NVIDIA and 3M is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and 3M go up and down completely randomly.
Pair Corralation between NVIDIA and 3M
Given the investment horizon of 90 days NVIDIA is expected to under-perform the 3M. In addition to that, NVIDIA is 1.96 times more volatile than 3M Company. It trades about -0.14 of its total potential returns per unit of risk. 3M Company is currently generating about -0.07 per unit of volatility. If you would invest 13,230 in 3M Company on September 12, 2024 and sell it today you would lose (253.00) from holding 3M Company or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. 3M Company
Performance |
| Timeline |
| NVIDIA |
| 3M Company |
NVIDIA and 3M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and 3M
The main advantage of trading using opposite NVIDIA and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| 3M vs. Victory Integrity Smallmid Cap | 3M vs. Hilton Worldwide Holdings | 3M vs. NVIDIA | 3M vs. JPMorgan Chase Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |