Correlation Between 3M and IShares Global

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

Diversification Opportunities for 3M and IShares Global

  Correlation Coefficient

Poor diversification

The 3 months correlation between 3M and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and IShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares Global Infra 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares Global Infra has no effect on the direction of 3M i.e., 3M and IShares Global go up and down completely randomly.

Pair Corralation between 3M and IShares Global

Considering the 90-day investment horizon 3M is expected to generate 1.93 times less return on investment than IShares Global. In addition to that, 3M is 1.17 times more volatile than IShares Global Infrastructure. It trades about 0.14 of its total potential returns per unit of risk. IShares Global Infrastructure is currently generating about 0.31 per unit of volatility. If you would invest  4,375  in IShares Global Infrastructure on September 3, 2022 and sell it today you would earn a total of  409.00  from holding IShares Global Infrastructure or generate 9.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

3M Company  vs.  IShares Global Infrastructure

 Performance (%) 
3M Company 
3M Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady primary indicators, 3M may actually be approaching a critical reversion point that can send shares even higher in January 2023.

3M Price Channel

IShares Global Infra 
IShares Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in IShares Global Infrastructure are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, IShares Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

IShares Price Channel

3M and IShares Global Volatility Contrast

   Predicted Return Density   

Pair Trading with 3M and IShares Global

The main advantage of trading using opposite 3M and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, IShares Global 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 IShares Global will offset losses from the drop in IShares Global's long position.
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The idea behind 3M Company and IShares Global Infrastructure 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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