Correlation Between Sherwin Williams and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies, you can compare the effects of market volatilities on Sherwin Williams and Sensient Technologies 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Sensient Technologies.
Diversification Opportunities for Sherwin Williams and Sensient Technologies
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sherwin and Sensient is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Sensient Technologies go up and down completely randomly.
Pair Corralation between Sherwin Williams and Sensient Technologies
Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.84 times more return on investment than Sensient Technologies. However, Sherwin Williams Co is 1.2 times less risky than Sensient Technologies. It trades about 0.25 of its potential returns per unit of risk. Sensient Technologies is currently generating about -0.02 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sherwin Williams Co vs. Sensient Technologies
Performance |
| Timeline |
| Sherwin Williams |
| Sensient Technologies |
Sherwin Williams and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherwin Williams and Sensient Technologies
The main advantage of trading using opposite Sherwin Williams and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.| Sherwin Williams vs. Air Products and | Sherwin Williams vs. Linde plc Ordinary | Sherwin Williams vs. Ecolab Inc | Sherwin Williams vs. RPM International |
| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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