3m Company Stock Volatility
| MMM Stock | USD 92.02 0.98 1.05% |
3M appears to be very steady, given 3 months investment horizon. 3M Company retains Efficiency (Sharpe Ratio) of 0.16, which signifies that the company had a 0.16% return per unit of price deviation over the last 3 months. We have found thirty technical indicators for 3M, which you can use to evaluate the volatility of the firm. Please makes use of 3M's Standard Deviation of 1.64, coefficient of variation of 617.57, and Market Risk Adjusted Performance of 0.2634 to double-check if our risk estimates are consistent with your expectations. Key indicators related to 3M's volatility include:
30 Days Market Risk | Chance Of Distress | 30 Days Economic Sensitivity |
3M Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of 3M daily returns, and it is calculated using variance and standard deviation. We also use 3M's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of 3M volatility.
3M |
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as 3M can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of 3M at lower prices. For example, an investor can purchase 3M stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of 3M's stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.
Moving together with 3M Stock
| 0.64 | GBX | Greenbrier Companies Financial Report 4th of July 2024 | PairCorr |
| 0.73 | FSTR | LB Foster Financial Report 14th of May 2024 | PairCorr |
Moving against 3M Stock
| 0.67 | BBU | Brookfield Business Earnings Call This Week | PairCorr |
| 0.64 | RUN | Sunrun Inc Financial Report 1st of May 2024 | PairCorr |
| 0.6 | FBYD | Falcons Beyond Global | PairCorr |
| 0.53 | CYD | China Yuchai Interna | PairCorr |
| 0.5 | NXT | Nextracker Class A Financial Report 8th of May 2024 | PairCorr |
3M Market Sensitivity And Downside Risk
3M's beta coefficient measures the volatility of 3M stock compared to the systematic risk of the entire market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents 3M stock's returns against your selected market. In other words, 3M's beta of 1.01 provides an investor with an approximation of how much risk 3M stock can potentially add to one of your existing portfolios. 3M Company has relatively low volatility with skewness of 1.34 and kurtosis of 3.4. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure 3M's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact 3M's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different financial instruments as prices fall.
3 Months Beta |Analyze 3M Company Demand TrendCheck current 90 days 3M correlation with market (NYSE Composite)3M Beta |
3M standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. A typical volatile entity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.
Standard Deviation | 1.64 |
It is essential to understand the difference between upside risk (as represented by 3M's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of 3M's daily returns or price. Since the actual investment returns on holding a position in 3m stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in 3M.
3M Company Stock Volatility Analysis
Volatility refers to the frequency at which 3M stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with 3M's price changes. Investors will then calculate the volatility of 3M's stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of 3M's volatility:
Historical Volatility
This type of stock volatility measures 3M's fluctuations based on previous trends. It's commonly used to predict 3M's future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.Implied Volatility
This type of volatility provides a positive outlook on future price fluctuations for 3M's current market price. This means that the stock will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on 3M's to be redeemed at a future date.Transformation |
The output start index for this execution was zero with a total number of output elements of sixty-one. 3M Company Average Price is the average of the sum of open, high, low and close daily prices of a bar. It can be used to smooth an indicator that normally takes just the closing price as input.
3M Projected Return Density Against Market
Considering the 90-day investment horizon the stock has the beta coefficient of 1.0094 . This indicates 3M Company market returns are highly reactive to returns on the market. As the market goes up or down, 3M is expected to follow.Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to 3M or Industrial Conglomerates sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that 3M's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a 3M stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
3M Company has an alpha of 0.1772, implying that it can generate a 0.18 percent excess return over NYSE Composite after adjusting for the inherited market risk (beta). Predicted Return Density |
| Returns |
What Drives a 3M Price Volatility?
Several factors can influence a stock's market volatility:Industry
Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.Political and Economic environment
When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.The Company's Performance
Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.3M Stock Risk Measures
Considering the 90-day investment horizon the coefficient of variation of 3M is 617.57. The daily returns are distributed with a variance of 2.69 and standard deviation of 1.64. The mean deviation of 3M Company is currently at 1.13. For similar time horizon, the selected benchmark (NYSE Composite) has volatility of 0.62
α | Alpha over NYSE Composite | 0.18 | |
β | Beta against NYSE Composite | 1.01 | |
σ | Overall volatility | 1.64 | |
Ir | Information ratio | 0.11 |
3M Stock Return Volatility
3M historical daily return volatility represents how much of 3M stock's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. The firm has volatility of 1.6413% on return distribution over 90 days investment horizon. By contrast, NYSE Composite accepts 0.6372% volatility on return distribution over the 90 days horizon. Performance |
| Timeline |
About 3M Volatility
Volatility is a rate at which the price of 3M or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of 3M may increase or decrease. In other words, similar to 3M's beta indicator, it measures the risk of 3M and helps estimate the fluctuations that may happen in a short period of time. So if prices of 3M fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.3M Company operates as a diversified technology company worldwide. It offers its products through e-commerce and traditional wholesalers, retailers, jobbers, distributors, and dealers. 3M operates under Conglomerates classification in the United States and is traded on New York Stock Exchange. It employs 95000 people.
3M's stock volatility refers to the amount of uncertainty or risk involved with the size of changes in its stock's price. It is a statistical measure of the dispersion of returns on 3M Stock over a specified period of time, often expressed as the standard deviation of daily returns. In other words, it measures how much 3M's price varies over time.
3 ways to utilize 3M's volatility to invest better
Higher 3M's stock volatility means that the price of its stock is changing rapidly and unpredictably, while lower stock volatility indicates that the price of 3M Company stock is relatively stable. Investors and traders use stock volatility as an indicator of risk and potential reward, as stocks with higher volatility can offer the potential for more significant returns but also come with a greater risk of losses. 3M Company stock volatility can provide helpful information for making investment decisions in the following ways:- Measuring Risk: Volatility can be used as a measure of risk, which can help you determine the potential fluctuations in the value of 3M Company investment. A higher volatility means higher risk and potentially larger changes in value.
- Identifying Opportunities: High volatility in 3M's stock can indicate that there is potential for significant price movements, either up or down, which could present investment opportunities.
- Diversification: Understanding how the volatility of 3M's stock relates to your other investments can help you create a well-diversified portfolio of assets with varying levels of risk.
3M Investment Opportunity
3M Company has a volatility of 1.64 and is 2.56 times more volatile than NYSE Composite. Compared to the overall equity markets, volatility of historical daily returns of 3M Company is lower than 14 percent of all global equities and portfolios over the last 90 days. You can use 3M Company to protect your portfolios against small market fluctuations. The stock experiences a somewhat bearish sentiment, but the market may correct it shortly. Check odds of 3M to be traded at $89.26 in 90 days.Weak diversification
The correlation between 3M Company and NYA is 0.39 (i.e., Weak diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and NYA in the same portfolio, assuming nothing else is changed.
3M Additional Risk Indicators
The analysis of 3M's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in 3M's investment and either accepting that risk or mitigating it. Along with some common measures of 3M stock's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
| Risk Adjusted Performance | 0.1073 | |||
| Market Risk Adjusted Performance | 0.2634 | |||
| Mean Deviation | 1.13 | |||
| Semi Deviation | 1.02 | |||
| Downside Deviation | 1.24 | |||
| Coefficient Of Variation | 617.57 | |||
| Standard Deviation | 1.64 |
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stocks, we recommend comparing similar stocks with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.
3M Suggested Diversification Pairs
Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against 3M as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. 3M's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, 3M's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to 3M Company.
When determining whether 3M Company is a strong investment it is important to analyze 3M's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact 3M's future performance. For an informed investment choice regarding 3M Stock, refer to the following important reports: Check out Correlation Analysis to better understand how to build diversified portfolios, which includes a position in 3M Company. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in population. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Complementary Tools for 3M Stock analysis
When running 3M's price analysis, check to measure 3M's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy 3M is operating at the current time. Most of 3M's value examination focuses on studying past and present price action to predict the probability of 3M's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move 3M's price. Additionally, you may evaluate how the addition of 3M to your portfolios can decrease your overall portfolio volatility.
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Is 3M's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of 3M. If investors know 3M will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about 3M listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of 3M Company is measured differently than its book value, which is the value of 3M that is recorded on the company's balance sheet. Investors also form their own opinion of 3M's value that differs from its market value or its book value, called intrinsic value, which is 3M's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because 3M's market value can be influenced by many factors that don't directly affect 3M's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between 3M's value and its price as these two are different measures arrived at by different means. Investors typically determine if 3M is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, 3M's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.