Correlation Between Aluminumof China and Sherwin Williams
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and Sherwin Williams 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 Aluminumof China and Sherwin Williams into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and The Sherwin Williams, you can compare the effects of market volatilities on Aluminumof China and Sherwin Williams 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 Aluminumof China with a short position of Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Sherwin Williams.
Diversification Opportunities for Aluminumof China and Sherwin Williams
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aluminumof and Sherwin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and The Sherwin Williams in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Aluminumof China 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 Aluminum of are associated (or correlated) with Sherwin Williams. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherwin Williams has no effect on the direction of Aluminumof China i.e., Aluminumof China and Sherwin Williams go up and down completely randomly.
Pair Corralation between Aluminumof China and Sherwin Williams
Assuming the 90 days horizon Aluminumof China is expected to generate 1.16 times less return on investment than Sherwin Williams. In addition to that, Aluminumof China is 2.25 times more volatile than The Sherwin Williams. It trades about 0.05 of its total potential returns per unit of risk. The Sherwin Williams is currently generating about 0.14 per unit of volatility. If you would invest 27,934 in The Sherwin Williams on September 3, 2024 and sell it today you would earn a total of 9,631 from holding The Sherwin Williams or generate 34.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. The Sherwin Williams
Performance |
| Timeline |
| Aluminumof China |
| Sherwin Williams |
Aluminumof China and Sherwin Williams Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Sherwin Williams
The main advantage of trading using opposite Aluminumof China and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, Sherwin Williams 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 Sherwin Williams will offset losses from the drop in Sherwin Williams' long position.| Aluminumof China vs. TITANIUM TRANSPORTGROUP | Aluminumof China vs. TSOGO SUN GAMING | Aluminumof China vs. Media and Games | Aluminumof China vs. UNIVMUSIC GRPADR050 |
| Sherwin Williams vs. Corsair Gaming | Sherwin Williams vs. INSURANCE AUST GRP | Sherwin Williams vs. Selective Insurance Group | Sherwin Williams vs. HF SINCLAIR P |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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