Correlation Between United Parcel and 3M

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both United Parcel 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 United Parcel and 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and 3M Company, you can compare the effects of market volatilities on United Parcel 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 United Parcel with a short position of 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and 3M.

Diversification Opportunities for United Parcel and 3M

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between United and 3M is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and 3M go up and down completely randomly.

Pair Corralation between United Parcel and 3M

Considering the 90-day investment horizon United Parcel Service is expected to under-perform the 3M. In addition to that, United Parcel is 1.09 times more volatile than 3M Company. It trades about 0.0 of its total potential returns per unit of risk. 3M Company is currently generating about 0.31 per unit of volatility. If you would invest  9,230  in 3M Company on December 29, 2023 and sell it today you would earn a total of  1,229  from holding 3M Company or generate 13.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

United Parcel Service  vs.  3M Company

 Performance 
       Timeline  
United Parcel Service 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days United Parcel Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, United Parcel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
3M Company 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days 3M Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, 3M is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

United Parcel and 3M Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Parcel and 3M

The main advantage of trading using opposite United Parcel and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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.
The idea behind United Parcel Service and 3M Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

Other Complementary Tools

Bonds Directory
Find actively traded corporate debentures issued by US companies
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Insider Screener
Find insiders across different sectors to evaluate their impact on performance