Correlation Between Sherwin Williams and FutureFuel Corp
Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and FutureFuel Corp 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 FutureFuel Corp 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 FutureFuel Corp, you can compare the effects of market volatilities on Sherwin Williams and FutureFuel Corp 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 FutureFuel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and FutureFuel Corp.
Diversification Opportunities for Sherwin Williams and FutureFuel Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sherwin and FutureFuel is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and FutureFuel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FutureFuel Corp 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 FutureFuel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FutureFuel Corp has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and FutureFuel Corp go up and down completely randomly.
Pair Corralation between Sherwin Williams and FutureFuel Corp
Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.45 times more return on investment than FutureFuel Corp. However, Sherwin Williams Co is 2.2 times less risky than FutureFuel Corp. It trades about 0.14 of its potential returns per unit of risk. FutureFuel Corp is currently generating about 0.05 per unit of risk. If you would invest 30,057 in Sherwin Williams Co on August 24, 2024 and sell it today you would earn a total of 8,275 from holding Sherwin Williams Co or generate 27.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherwin Williams Co vs. FutureFuel Corp
Performance |
| Timeline |
| Sherwin Williams |
| FutureFuel Corp |
Sherwin Williams and FutureFuel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherwin Williams and FutureFuel Corp
The main advantage of trading using opposite Sherwin Williams and FutureFuel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, FutureFuel Corp 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 FutureFuel Corp will offset losses from the drop in FutureFuel Corp's long position.| Sherwin Williams vs. Air Products and | Sherwin Williams vs. Linde plc Ordinary | Sherwin Williams vs. Ecolab Inc | Sherwin Williams vs. RPM International |
| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. Quaker Chemical | FutureFuel Corp vs. Ecovyst | FutureFuel Corp vs. Minerals Technologies |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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