Correlation Between Sherwin Williams and Nitto Denko
Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Nitto Denko 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 Nitto Denko 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 Nitto Denko Corp, you can compare the effects of market volatilities on Sherwin Williams and Nitto Denko 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 Nitto Denko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Nitto Denko.
Diversification Opportunities for Sherwin Williams and Nitto Denko
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sherwin and Nitto is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Nitto Denko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitto Denko 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 Nitto Denko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitto Denko Corp has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Nitto Denko go up and down completely randomly.
Pair Corralation between Sherwin Williams and Nitto Denko
Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.76 times more return on investment than Nitto Denko. However, Sherwin Williams Co is 1.32 times less risky than Nitto Denko. It trades about 0.07 of its potential returns per unit of risk. Nitto Denko Corp is currently generating about 0.04 per unit of risk. If you would invest 24,929 in Sherwin Williams Co on September 1, 2024 and sell it today you would earn a total of 14,811 from holding Sherwin Williams Co or generate 59.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherwin Williams Co vs. Nitto Denko Corp
Performance |
| Timeline |
| Sherwin Williams |
| Nitto Denko Corp |
Sherwin Williams and Nitto Denko Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherwin Williams and Nitto Denko
The main advantage of trading using opposite Sherwin Williams and Nitto Denko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Nitto Denko 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 Nitto Denko will offset losses from the drop in Nitto Denko's long position.| Sherwin Williams vs. Linde plc Ordinary | Sherwin Williams vs. Air Products and | Sherwin Williams vs. Aquagold International | Sherwin Williams vs. Thrivent High Yield |
| Nitto Denko vs. Sherwin Williams Co | Nitto Denko vs. Air Liquide SA | Nitto Denko vs. Air Products and | Nitto Denko vs. Ecolab Inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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