Correlation Between 3M and Western Asset
Can any of the company-specific risk be diversified away by investing in both 3M and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Western Asset Imf, you can compare the effects of market volatilities on 3M and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Western Asset.
Diversification Opportunities for 3M and Western Asset
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 3M and Western is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Western Asset Imf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Imf 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Imf has no effect on the direction of 3M i.e., 3M and Western Asset go up and down completely randomly.
Pair Corralation between 3M and Western Asset
Considering the 90-day investment horizon 3M is expected to generate 3.59 times less return on investment than Western Asset. In addition to that, 3M is 3.15 times more volatile than Western Asset Imf. It trades about 0.0 of its total potential returns per unit of risk. Western Asset Imf is currently generating about 0.03 per unit of volatility. If you would invest 731.00 in Western Asset Imf on January 24, 2024 and sell it today you would earn a total of 39.00 from holding Western Asset Imf or generate 5.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
3M Company vs. Western Asset Imf
Performance |
Timeline |
3M Company |
Western Asset Imf |
3M and Western Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 3M and Western Asset
The main advantage of trading using opposite 3M and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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