Correlation Between 3M and Bidvest

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

Diversification Opportunities for 3M and Bidvest

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between 3M and Bidvest is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Bidvest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bidvest Group 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 Bidvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bidvest Group has no effect on the direction of 3M i.e., 3M and Bidvest go up and down completely randomly.

Pair Corralation between 3M and Bidvest

If you would invest  1,265  in Bidvest Group on July 3, 2022 and sell it today you would earn a total of  0.00  from holding Bidvest Group or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

3M Company  vs.  Bidvest Group

 Performance (%) 
       Timeline  
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 November 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

3M Price Channel

Bidvest Group 
Bidvest Performance
0 of 100
Over the last 90 days Bidvest Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bidvest is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Bidvest Price Channel

3M and Bidvest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 3M and Bidvest

The main advantage of trading using opposite 3M and Bidvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Bidvest 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 Bidvest will offset losses from the drop in Bidvest's long position.
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The idea behind 3M Company and Bidvest Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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