Correlation Between 3M and Crane Holdings

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both 3M and Crane 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 Crane 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 Crane Holdings CO, you can compare the effects of market volatilities on 3M and Crane 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 Crane Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Crane Holdings.

Diversification Opportunities for 3M and Crane Holdings

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between 3M and Crane is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Crane Holdings CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Holdings CO 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 Crane Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Holdings CO has no effect on the direction of 3M i.e., 3M and Crane Holdings go up and down completely randomly.

Pair Corralation between 3M and Crane Holdings

Considering the 90-day investment horizon 3M is expected to generate 1.08 times less return on investment than Crane Holdings. But when comparing it to its historical volatility, 3M Company is 1.03 times less risky than Crane Holdings. It trades about 0.52 of its potential returns per unit of risk. Crane Holdings CO is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  8,900  in Crane Holdings CO on May 18, 2022 and sell it today you would earn a total of  1,683  from holding Crane Holdings CO or generate 18.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

3M Company  vs.  Crane Holdings CO

 Performance (%) 
       Timeline  
3M Company 
3M Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 2 (%) 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 latest stock price chaos, may contribute to medium-term losses for the stakeholders.

3M Price Channel

Crane Holdings CO 
Crane Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Crane Holdings CO are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Crane Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Crane Price Channel

3M and Crane Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 3M and Crane Holdings

The main advantage of trading using opposite 3M and Crane Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Crane 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 Crane Holdings will offset losses from the drop in Crane Holdings' long position.
The idea behind 3M Company and Crane Holdings CO 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.
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 CEO Directory module to screen CEOs from public companies around the world.

Other Complementary Tools

Stock Screener
Find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go