Correlation Between IShares Global and 3M
Can any of the company-specific risk be diversified away by investing in both IShares Global 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 IShares Global and 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Timber and 3M Company, you can compare the effects of market volatilities on IShares Global 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 IShares Global with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and 3M.
Diversification Opportunities for IShares Global and 3M
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and 3M is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Timber and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and IShares Global 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 iShares Global Timber 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 IShares Global i.e., IShares Global and 3M go up and down completely randomly.
Pair Corralation between IShares Global and 3M
Assuming the 90 days trading horizon iShares Global Timber is expected to generate 0.06 times more return on investment than 3M. However, iShares Global Timber is 17.26 times less risky than 3M. It trades about 0.22 of its potential returns per unit of risk. 3M Company is currently generating about -0.01 per unit of risk. If you would invest 177,917 in iShares Global Timber on September 21, 2024 and sell it today you would earn a total of 680.00 from holding iShares Global Timber or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Global Timber vs. 3M Company
Performance |
| Timeline |
| iShares Global Timber |
| 3M Company |
IShares Global and 3M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and 3M
The main advantage of trading using opposite IShares Global and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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.| IShares Global vs. The Select Sector | IShares Global vs. ProShares Trust | IShares Global vs. iShares Trust | IShares Global vs. Vanguard World |
| 3M vs. Emerson Electric Co | 3M vs. The Select Sector | 3M vs. Promotora y Operadora | 3M vs. iShares Global Timber |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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