Correlation Between Orica and Sherwin Williams
Can any of the company-specific risk be diversified away by investing in both Orica 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 Orica and Sherwin Williams into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orica Ltd ADR and Sherwin Williams Co, you can compare the effects of market volatilities on Orica 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 Orica with a short position of Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orica and Sherwin Williams.
Diversification Opportunities for Orica and Sherwin Williams
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orica and Sherwin is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Orica Ltd ADR and Sherwin Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Orica 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 Orica Ltd ADR 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 Orica i.e., Orica and Sherwin Williams go up and down completely randomly.
Pair Corralation between Orica and Sherwin Williams
Assuming the 90 days horizon Orica Ltd ADR is expected to under-perform the Sherwin Williams. In addition to that, Orica is 1.85 times more volatile than Sherwin Williams Co. It trades about -0.01 of its total potential returns per unit of risk. Sherwin Williams Co is currently generating about 0.16 per unit of volatility. If you would invest 30,087 in Sherwin Williams Co on September 1, 2024 and sell it today you would earn a total of 9,653 from holding Sherwin Williams Co or generate 32.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Orica Ltd ADR vs. Sherwin Williams Co
Performance |
| Timeline |
| Orica Ltd ADR |
| Sherwin Williams |
Orica and Sherwin Williams Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orica and Sherwin Williams
The main advantage of trading using opposite Orica and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orica 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.The idea behind Orica Ltd ADR and Sherwin Williams Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sherwin Williams vs. Linde plc Ordinary | Sherwin Williams vs. Air Products and | Sherwin Williams vs. Aquagold International | Sherwin Williams vs. Thrivent High Yield |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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