Correlation Between 3M and Dataax

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

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

Diversification Opportunities for 3M and Dataax

0.81

Correlation Coefficient

3M  Dataax

Very poor diversification

The 3 months correlation between 3M and Dataax is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Dataax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dataax 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 Dataax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dataax has no effect on the direction of 3M i.e., 3M and Dataax go up and down completely randomly.

Pair Corralation between 3M and Dataax

Considering the 90-day investment horizon 3M is expected to generate 2.72 times less return on investment than Dataax. In addition to that, 3M is 1.31 times more volatile than Dataax. It trades about 0.11 of its total potential returns per unit of risk. Dataax is currently generating about 0.4 per unit of volatility. If you would invest  830.00  in Dataax on April 29, 2025 and sell it today you would earn a total of  243.00  from holding Dataax or generate 29.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.32%
Values	Daily Returns

3M Company  vs.  Dataax

3M Company

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, 3M may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Dataax

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dataax are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dataax showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 3M and Dataax

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

The idea behind 3M Company and Dataax 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.