Correlation Between Sherwin Williams and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Element Solutions 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 Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Sherwin Williams and Element Solutions, you can compare the effects of market volatilities on Sherwin Williams and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Element Solutions.
Diversification Opportunities for Sherwin Williams and Element Solutions
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sherwin and Element is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Sherwin Williams and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 The Sherwin Williams are associated (or correlated) with Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Element Solutions go up and down completely randomly.
Pair Corralation between Sherwin Williams and Element Solutions
Assuming the 90 days horizon The Sherwin Williams is expected to under-perform the Element Solutions. But the stock apears to be less risky and, when comparing its historical volatility, The Sherwin Williams is 1.22 times less risky than Element Solutions. The stock trades about -0.61 of its potential returns per unit of risk. The Element Solutions is currently generating about -0.41 of returns per unit of risk over similar time horizon. If you would invest 2,752 in Element Solutions on September 24, 2024 and sell it today you would lose (312.00) from holding Element Solutions or give up 11.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Sherwin Williams vs. Element Solutions
Performance |
| Timeline |
| Sherwin Williams |
| Element Solutions |
Sherwin Williams and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sherwin Williams and Element Solutions
The main advantage of trading using opposite Sherwin Williams and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Sherwin Williams vs. Linde plc | Sherwin Williams vs. Linde PLC | Sherwin Williams vs. Air Liquide SA | Sherwin Williams vs. Ecolab Inc |
| Element Solutions vs. JD SPORTS FASH | Element Solutions vs. PLAYTIKA HOLDING DL 01 | Element Solutions vs. Live Nation Entertainment | Element Solutions vs. Ubisoft Entertainment SA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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