Correlation Between 3M and Capri Holdings

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both 3M and Capri Holdings 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 Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Capri Holdings, you can compare the effects of market volatilities on 3M and Capri Holdings 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 Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Capri Holdings.

Diversification Opportunities for 3M and Capri Holdings

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between 3M and Capri is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings 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 Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of 3M i.e., 3M and Capri Holdings go up and down completely randomly.

Pair Corralation between 3M and Capri Holdings

Considering the 90-day investment horizon 3M is expected to generate 9.08 times less return on investment than Capri Holdings. But when comparing it to its historical volatility, 3M Company is 2.59 times less risky than Capri Holdings. It trades about 0.06 of its potential returns per unit of risk. Capri Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,568  in Capri Holdings on August 30, 2022 and sell it today you would earn a total of  832.00  from holding Capri Holdings or generate 18.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

3M Company  vs.  Capri Holdings

 Performance (%) 
       Timeline  
3M Company 
3M Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady primary indicators, 3M is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

3M Price Channel

Capri Holdings 
Capri Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Capri Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Capri Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Capri Price Channel

3M and Capri Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 3M and Capri Holdings

The main advantage of trading using opposite 3M and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Capri Holdings 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 Capri Holdings will offset losses from the drop in Capri Holdings' long position.
3M vs. Carlisle Companies
3M vs. Emerson Electric
3M vs. Eaton Corp
3M vs. Fortive Corp
The idea behind 3M Company and Capri Holdings 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.
Capri Holdings vs. Lvmh Moet Henn
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go