Correlation Between Sherwin Williams and Johnson Matthey
Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Johnson Matthey 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 Johnson Matthey 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 Johnson Matthey PLC, you can compare the effects of market volatilities on Sherwin Williams and Johnson Matthey 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 Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Johnson Matthey.
Diversification Opportunities for Sherwin Williams and Johnson Matthey
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sherwin and Johnson is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey PLC 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Johnson Matthey go up and down completely randomly.
Pair Corralation between Sherwin Williams and Johnson Matthey
Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.6 times more return on investment than Johnson Matthey. However, Sherwin Williams Co is 1.66 times less risky than Johnson Matthey. It trades about 0.26 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about -0.25 per unit of risk. If you would invest 36,095 in Sherwin Williams Co on August 30, 2024 and sell it today you would earn a total of 3,301 from holding Sherwin Williams Co or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherwin Williams Co vs. Johnson Matthey PLC
Performance |
| Timeline |
| Sherwin Williams |
| Johnson Matthey PLC |
Sherwin Williams and Johnson Matthey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherwin Williams and Johnson Matthey
The main advantage of trading using opposite Sherwin Williams and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Johnson Matthey 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 Johnson Matthey will offset losses from the drop in Johnson Matthey'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 |
| Johnson Matthey vs. Sensient Technologies | Johnson Matthey vs. Koppers Holdings | Johnson Matthey vs. Axalta Coating Systems | Johnson Matthey vs. Select Energy Services |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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