Correlation Between OReilly Automotive and 3M
Can any of the company-specific risk be diversified away by investing in both OReilly Automotive 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 OReilly Automotive and 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OReilly Automotive and 3M Company, you can compare the effects of market volatilities on OReilly Automotive 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 OReilly Automotive with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of OReilly Automotive and 3M.
Diversification Opportunities for OReilly Automotive and 3M
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OReilly and 3M is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding OReilly Automotive and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and OReilly Automotive 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 OReilly Automotive 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 OReilly Automotive i.e., OReilly Automotive and 3M go up and down completely randomly.
Pair Corralation between OReilly Automotive and 3M
Given the investment horizon of 90 days OReilly Automotive is expected to generate 0.84 times more return on investment than 3M. However, OReilly Automotive is 1.19 times less risky than 3M. It trades about 0.07 of its potential returns per unit of risk. 3M Company is currently generating about -0.02 per unit of risk. If you would invest 72,394 in OReilly Automotive on December 30, 2023 and sell it today you would earn a total of 40,494 from holding OReilly Automotive or generate 55.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
OReilly Automotive vs. 3M Company
Performance |
Timeline |
OReilly Automotive |
3M Company |
OReilly Automotive and 3M Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with OReilly Automotive and 3M
The main advantage of trading using opposite OReilly Automotive and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OReilly Automotive 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.OReilly Automotive vs. Boqii Holding Limited | OReilly Automotive vs. Naas Technology ADR | OReilly Automotive vs. EVgo Equity Warrants | OReilly Automotive vs. WEBUY GLOBAL LTD |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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