Correlation Between 3M and Simplify Exchange

Can any of the company-specific risk be diversified away by investing in both 3M and Simplify Exchange 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 Simplify Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3M Company and Simplify Exchange Traded, you can compare the effects of market volatilities on 3M and Simplify Exchange 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 Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Simplify Exchange.

Diversification Opportunities for 3M and Simplify Exchange

0.61

Correlation Coefficient

3M  Simplify Exchange

Poor diversification

The 3 months correlation between 3M and Simplify is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded 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 Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of 3M i.e., 3M and Simplify Exchange go up and down completely randomly.

Pair Corralation between 3M and Simplify Exchange

Considering the 90-day investment horizon 3M is expected to generate 4.47 times less return on investment than Simplify Exchange. In addition to that, 3M is 1.08 times more volatile than Simplify Exchange Traded. It trades about 0.02 of its total potential returns per unit of risk. Simplify Exchange Traded is currently generating about 0.11 per unit of volatility. If you would invest  2,868  in Simplify Exchange Traded on May 10, 2025 and sell it today you would earn a total of  259.00  from holding Simplify Exchange Traded or generate 9.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

3M Company  vs.  Simplify Exchange Traded

3M Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Simplify Exchange Traded

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Simplify Exchange may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with 3M and Simplify Exchange

The main advantage of trading using opposite 3M and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Simplify Exchange 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 Simplify Exchange will offset losses from the drop in Simplify Exchange's long position.

The idea behind 3M Company and Simplify Exchange Traded 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.