Correlation Between Aci Worldwide and 3M

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

Diversification Opportunities for Aci Worldwide and 3M

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aci Worldwide and 3M is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aci Worldwide and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and Aci Worldwide 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 Aci Worldwide 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 Aci Worldwide i.e., Aci Worldwide and 3M go up and down completely randomly.

Pair Corralation between Aci Worldwide and 3M

Given the investment horizon of 90 days Aci Worldwide is expected to under-perform the 3M. But the stock apears to be less risky and, when comparing its historical volatility, Aci Worldwide is 1.15 times less risky than 3M. The stock trades about -0.35 of its potential returns per unit of risk. The 3M Company is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  13,745  in 3M Company on June 27, 2022 and sell it today you would lose (2,446)  from holding 3M Company or give up 17.8% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aci Worldwide  vs.  3M Company

 Performance (%) 
       Timeline  
Aci Worldwide 
Aci Worldwide Performance
0 of 100
Over the last 90 days Aci Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in October 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Aci Worldwide Price Channel

3M Company 
3M Performance
0 of 100
Over the last 90 days 3M Company has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

3M Price Channel

Aci Worldwide and 3M Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aci Worldwide and 3M

The main advantage of trading using opposite Aci Worldwide and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aci Worldwide 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.
Aci Worldwide vs. Industrias Bachoco SA
The idea behind Aci Worldwide 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.
3M vs. BUSHVELD MINERALS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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