Correlation Between 3M and Mfs Mid
Can any of the company-specific risk be diversified away by investing in both 3M and Mfs Mid 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 Mfs Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Mfs Mid Cap, you can compare the effects of market volatilities on 3M and Mfs Mid 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 Mfs Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Mfs Mid.
Diversification Opportunities for 3M and Mfs Mid
Very weak diversification
The 3 months correlation between 3M and Mfs is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Mfs Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Mid Cap 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 Mfs Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Mid Cap has no effect on the direction of 3M i.e., 3M and Mfs Mid go up and down completely randomly.
Pair Corralation between 3M and Mfs Mid
Considering the 90-day investment horizon 3M Company is expected to generate 3.07 times more return on investment than Mfs Mid. However, 3M is 3.07 times more volatile than Mfs Mid Cap. It trades about 0.04 of its potential returns per unit of risk. Mfs Mid Cap is currently generating about 0.07 per unit of risk. If you would invest 8,855 in 3M Company on January 21, 2024 and sell it today you would earn a total of 372.00 from holding 3M Company or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Mfs Mid Cap
Performance |
| Timeline |
| 3M Company |
| Mfs Mid Cap |
3M and Mfs Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Mfs Mid
The main advantage of trading using opposite 3M and Mfs Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Mfs Mid 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 Mfs Mid will offset losses from the drop in Mfs Mid's long position.| 3M vs. MDU Resources Group | 3M vs. Compass Diversified Holdings | 3M vs. Brookfield Business Partners | 3M vs. Matthews International |
| Mfs Mid vs. Mfs Prudent Investor | Mfs Mid vs. Mfs Prudent Investor | Mfs Mid vs. Mfs Prudent Investor | Mfs Mid vs. Mfs Prudent Investor |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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