Correlation Between Commonwealth Bank and Sherwin Williams
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank 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 Commonwealth Bank and Sherwin Williams into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and The Sherwin Williams, you can compare the effects of market volatilities on Commonwealth Bank 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 Commonwealth Bank with a short position of Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Sherwin Williams.
Diversification Opportunities for Commonwealth Bank and Sherwin Williams
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commonwealth and Sherwin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank 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 Commonwealth Bank 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 Commonwealth Bank 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 Commonwealth Bank i.e., Commonwealth Bank and Sherwin Williams go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Sherwin Williams
Assuming the 90 days horizon Commonwealth Bank of is expected to under-perform the Sherwin Williams. But the stock apears to be less risky and, when comparing its historical volatility, Commonwealth Bank of is 1.47 times less risky than Sherwin Williams. The stock trades about -0.01 of its potential returns per unit of risk. The The Sherwin Williams is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 33,515 in The Sherwin Williams on December 1, 2024 and sell it today you would earn a total of 1,110 from holding The Sherwin Williams or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. The Sherwin Williams
Performance |
| Timeline |
| Commonwealth Bank |
| Sherwin Williams |
Commonwealth Bank and Sherwin Williams Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Sherwin Williams
The main advantage of trading using opposite Commonwealth Bank and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank 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.| Commonwealth Bank vs. CyberArk Software | Commonwealth Bank vs. Ringmetall SE | Commonwealth Bank vs. Jacquet Metal Service | Commonwealth Bank vs. MAGIC SOFTWARE ENTR |
| Sherwin Williams vs. Sotherly Hotels | Sherwin Williams vs. Playa Hotels Resorts | Sherwin Williams vs. MHP Hotel AG | Sherwin Williams vs. Spirent Communications plc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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