Correlation Between Sherwin Williams and Sika AG
Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Sika AG 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 Sika AG 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 Sika AG ADR, you can compare the effects of market volatilities on Sherwin Williams and Sika AG 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Sika AG.
Diversification Opportunities for Sherwin Williams and Sika AG
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sherwin and Sika is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Sika AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG ADR 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG ADR has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Sika AG go up and down completely randomly.
Pair Corralation between Sherwin Williams and Sika AG
Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.84 times more return on investment than Sika AG. However, Sherwin Williams Co is 1.19 times less risky than Sika AG. It trades about 0.09 of its potential returns per unit of risk. Sika AG ADR is currently generating about -0.01 per unit of risk. If you would invest 23,864 in Sherwin Williams Co on August 27, 2024 and sell it today you would earn a total of 14,966 from holding Sherwin Williams Co or generate 62.71% 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. Sika AG ADR
Performance |
| Timeline |
| Sherwin Williams |
| Sika AG ADR |
Sherwin Williams and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherwin Williams and Sika AG
The main advantage of trading using opposite Sherwin Williams and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG'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 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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