Correlation Between Greenwich Lifesciences and 3M

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

Diversification Opportunities for Greenwich Lifesciences and 3M

0.03
  Correlation Coefficient

Significant diversification

The 1 month correlation between Greenwich and 3M is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Greenwich Lifesciences and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and Greenwich Lifesciences 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 Greenwich Lifesciences 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 Greenwich Lifesciences i.e., Greenwich Lifesciences and 3M go up and down completely randomly.

Pair Corralation between Greenwich Lifesciences and 3M

Given the investment horizon of 90 days Greenwich Lifesciences is expected to generate 5.55 times more return on investment than 3M. However, Greenwich Lifesciences is 5.55 times more volatile than 3M Company. It trades about 0.09 of its potential returns per unit of risk. 3M Company is currently generating about 0.2 per unit of risk. If you would invest  785.00  in Greenwich Lifesciences on May 15, 2022 and sell it today you would earn a total of  175.00  from holding Greenwich Lifesciences or generate 22.29% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Greenwich Lifesciences  vs.  3M Company

 Performance (%) 
       Timeline  
Greenwich Lifesciences 
Greenwich Performance
0 of 100
Over the last 90 days Greenwich Lifesciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Greenwich Price Channel

3M Company 
3M Performance
39 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish primary indicators, 3M revealed solid returns over the last few months and may actually be approaching a breakup point.

3M Price Channel

Greenwich Lifesciences and 3M Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Greenwich Lifesciences and 3M

The main advantage of trading using opposite Greenwich Lifesciences and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenwich Lifesciences 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.

Greenwich Lifesciences

Pair trading matchups for Greenwich Lifesciences

The idea behind Greenwich Lifesciences 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 Company

Pair trading matchups for 3M

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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