Correlation Between Sherwin Williams and Air Products
Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Air Products 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 Sherwin Williams and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sherwin Williams Co and Air Products and, you can compare the effects of market volatilities on Sherwin Williams and Air Products 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 Sherwin Williams with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Air Products.
Diversification Opportunities for Sherwin Williams and Air Products
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sherwin and Air is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Sherwin Williams 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 Sherwin Williams Co are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Air Products go up and down completely randomly.
Pair Corralation between Sherwin Williams and Air Products
Considering the 90-day investment horizon Sherwin Williams is expected to generate 1.45 times less return on investment than Air Products. But when comparing it to its historical volatility, Sherwin Williams Co is 1.33 times less risky than Air Products. It trades about 0.06 of its potential returns per unit of risk. Air Products and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 25,049 in Air Products and on October 20, 2024 and sell it today you would earn a total of 6,731 from holding Air Products and or generate 26.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherwin Williams Co vs. Air Products and
Performance |
| Timeline |
| Sherwin Williams |
| Air Products |
Sherwin Williams and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherwin Williams and Air Products
The main advantage of trading using opposite Sherwin Williams and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Sherwin Williams vs. Air Products and | Sherwin Williams vs. Linde plc Ordinary | Sherwin Williams vs. Ecolab Inc | Sherwin Williams vs. RPM International |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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