Correlation Between 3M and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both 3M and Compass Diversified 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 Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Compass Diversified, you can compare the effects of market volatilities on 3M and Compass Diversified 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 Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Compass Diversified.
Diversification Opportunities for 3M and Compass Diversified
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3M and Compass is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Compass Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified 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 Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of 3M i.e., 3M and Compass Diversified go up and down completely randomly.
Pair Corralation between 3M and Compass Diversified
Considering the 90-day investment horizon 3M is expected to generate 7.07 times less return on investment than Compass Diversified. But when comparing it to its historical volatility, 3M Company is 1.15 times less risky than Compass Diversified. It trades about 0.01 of its potential returns per unit of risk. Compass Diversified is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,720 in Compass Diversified on June 9, 2025 and sell it today you would earn a total of 53.00 from holding Compass Diversified or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Compass Diversified
Performance |
| Timeline |
| 3M Company |
| Compass Diversified |
3M and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Compass Diversified
The main advantage of trading using opposite 3M and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Compass Diversified 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 Compass Diversified will offset losses from the drop in Compass Diversified's long position.| 3M vs. Honeywell International | 3M vs. MDU Resources Group | 3M vs. Compass Diversified Holdings | 3M vs. Valmont Industries |
| Compass Diversified vs. Compass Diversified | Compass Diversified vs. Compass Diversified | Compass Diversified vs. Tejon Ranch Co | Compass Diversified vs. Costamare |
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 the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |