Correlation Between 3M and Ebix
Can any of the company-specific risk be diversified away by investing in both 3M and Ebix 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 Ebix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Ebix Inc, you can compare the effects of market volatilities on 3M and Ebix 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 Ebix. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Ebix.
Diversification Opportunities for 3M and Ebix
Excellent diversification
The 3 months correlation between 3M and Ebix is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Ebix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebix Inc 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 Ebix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebix Inc has no effect on the direction of 3M i.e., 3M and Ebix go up and down completely randomly.
Pair Corralation between 3M and Ebix
If you would invest 8,563 in 3M Company on March 14, 2024 and sell it today you would earn a total of 1,558 from holding 3M Company or generate 18.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 1.59% |
Values | Daily Returns |
3M Company vs. Ebix Inc
Performance |
Timeline |
3M Company |
Ebix Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
3M and Ebix Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 3M and Ebix
The main advantage of trading using opposite 3M and Ebix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Ebix 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 Ebix will offset losses from the drop in Ebix's long position.3M vs. MDU Resources Group | 3M vs. Aquagold International | 3M vs. Morningstar Unconstrained Allocation | 3M vs. Thrivent High Yield |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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