Correlation Between GreenSky and 3M

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

Diversification Opportunities for GreenSky and 3M

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between GreenSky and 3M is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding GreenSky Inc and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and GreenSky 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 GreenSky 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 GreenSky i.e., GreenSky and 3M go up and down completely randomly.

Pair Corralation between GreenSky and 3M

If you would invest  1,020  in GreenSky on July 4, 2022 and sell it today you would earn a total of  0.00  from holding GreenSky or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy4.55%
ValuesDaily Returns

GreenSky Inc  vs.  3M Company

 Performance (%) 
       Timeline  
GreenSky 
GreenSky Performance
0 of 100
Over the last 90 days GreenSky has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, GreenSky is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
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 fragile performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in November 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

3M Price Channel

GreenSky and 3M Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GreenSky and 3M

The main advantage of trading using opposite GreenSky and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenSky 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.
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The idea behind GreenSky 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.
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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