Correlation Between 3M and WisdomTree MidCap
Can any of the company-specific risk be diversified away by investing in both 3M and WisdomTree MidCap 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 WisdomTree MidCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and WisdomTree MidCap Earnings, you can compare the effects of market volatilities on 3M and WisdomTree MidCap 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 WisdomTree MidCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and WisdomTree MidCap.
Diversification Opportunities for 3M and WisdomTree MidCap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 3M and WisdomTree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and WisdomTree MidCap Earnings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree MidCap 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 WisdomTree MidCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree MidCap has no effect on the direction of 3M i.e., 3M and WisdomTree MidCap go up and down completely randomly.
Pair Corralation between 3M and WisdomTree MidCap
Considering the 90-day investment horizon 3M is expected to generate 1.48 times less return on investment than WisdomTree MidCap. In addition to that, 3M is 1.51 times more volatile than WisdomTree MidCap Earnings. It trades about 0.08 of its total potential returns per unit of risk. WisdomTree MidCap Earnings is currently generating about 0.17 per unit of volatility. If you would invest 6,006 in WisdomTree MidCap Earnings on June 4, 2025 and sell it today you would earn a total of 614.00 from holding WisdomTree MidCap Earnings or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
3M Company vs. WisdomTree MidCap Earnings
Performance |
| Timeline |
| 3M Company |
| WisdomTree MidCap |
3M and WisdomTree MidCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and WisdomTree MidCap
The main advantage of trading using opposite 3M and WisdomTree MidCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, WisdomTree MidCap 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 WisdomTree MidCap will offset losses from the drop in WisdomTree MidCap's long position.| 3M vs. Honeywell International | 3M vs. MDU Resources Group | 3M vs. Compass Diversified Holdings | 3M vs. Valmont Industries |
| WisdomTree MidCap vs. Vanguard Mid Cap Value | WisdomTree MidCap vs. Vanguard Small Cap Growth | WisdomTree MidCap vs. Vanguard Value Index | WisdomTree MidCap vs. Vanguard Small Cap Index |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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