Correlation Between Invesco Oppenheimer and 3M

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

Diversification Opportunities for Invesco Oppenheimer and 3M

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Invesco and 3M is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Oppenheimer Portfolio and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company and Invesco Oppenheimer 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 Invesco Oppenheimer Portfolio 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 Invesco Oppenheimer i.e., Invesco Oppenheimer and 3M go up and down completely randomly.

Pair Corralation between Invesco Oppenheimer and 3M

Assuming the 90 days horizon Invesco Oppenheimer Portfolio is expected to under-perform the 3M. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Oppenheimer Portfolio is 1.27 times less risky than 3M. The mutual fund trades about -0.19 of its potential returns per unit of risk. The 3M Company is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  11,660  in 3M Company on July 6, 2022 and sell it today you would lose (338.00)  from holding 3M Company or give up 2.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Invesco Oppenheimer Portfolio  vs.  3M Company

 Performance (%) 
       Timeline  
Invesco Oppenheimer 
Invesco Performance
0 of 100
Over the last 90 days Invesco Oppenheimer Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Invesco Oppenheimer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Price Channel

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 latest unsteady performance, the Stock's primary indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

3M Price Channel

Invesco Oppenheimer and 3M Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Invesco Oppenheimer and 3M

The main advantage of trading using opposite Invesco Oppenheimer and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Oppenheimer 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.
Invesco Oppenheimer vs. Boeing Company
The idea behind Invesco Oppenheimer Portfolio 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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