Correlation Between 3M and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both 3M and Direxion Shares 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 Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Direxion Shares ETF, you can compare the effects of market volatilities on 3M and Direxion Shares 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 Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Direxion Shares.
Diversification Opportunities for 3M and Direxion Shares
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and Direxion is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF 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 Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of 3M i.e., 3M and Direxion Shares go up and down completely randomly.
Pair Corralation between 3M and Direxion Shares
Considering the 90-day investment horizon 3M Company is expected to generate 0.37 times more return on investment than Direxion Shares. However, 3M Company is 2.72 times less risky than Direxion Shares. It trades about 0.1 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.18 per unit of risk. If you would invest 8,763 in 3M Company on January 18, 2024 and sell it today you would earn a total of 342.00 from holding 3M Company or generate 3.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
3M Company vs. Direxion Shares ETF
Performance |
Timeline |
3M Company |
Direxion Shares ETF |
3M and Direxion Shares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 3M and Direxion Shares
The main advantage of trading using opposite 3M and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Direxion Shares 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 Direxion Shares will offset losses from the drop in Direxion Shares' long position.3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
Direxion Shares vs. HUMANA INC | Direxion Shares vs. Morningstar Unconstrained Allocation | Direxion Shares vs. Thrivent High Yield | Direxion Shares vs. High Yield Municipal Fund |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
Transaction History View history of all your transactions and understand their impact on performance | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Stocks Directory Find actively traded stocks across global markets | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |