Correlation Between Albemarle Corp and Sherwin Williams

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Can any of the company-specific risk be diversified away by investing in both Albemarle Corp and Sherwin Williams 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 Albemarle Corp and Sherwin Williams into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albemarle Corp and Sherwin Williams Co, you can compare the effects of market volatilities on Albemarle Corp and Sherwin Williams 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 Albemarle Corp with a short position of Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle Corp and Sherwin Williams.

Diversification Opportunities for Albemarle Corp and Sherwin Williams

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Albemarle and Sherwin is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle Corp and Sherwin-Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin-Williams and Albemarle Corp 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 Albemarle Corp are associated (or correlated) with Sherwin Williams. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherwin-Williams has no effect on the direction of Albemarle Corp i.e., Albemarle Corp and Sherwin Williams go up and down completely randomly.

Pair Corralation between Albemarle Corp and Sherwin Williams

Considering the 90-day investment horizon Albemarle Corp is expected to generate 1.44 times less return on investment than Sherwin Williams. In addition to that, Albemarle Corp is 5.44 times more volatile than Sherwin Williams Co. It trades about 0.03 of its total potential returns per unit of risk. Sherwin Williams Co is currently generating about 0.25 per unit of volatility. If you would invest  32,772  in Sherwin Williams Co on December 29, 2023 and sell it today you would earn a total of  1,917  from holding Sherwin Williams Co or generate 5.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Albemarle Corp  vs.  Sherwin-Williams Co

 Performance 
       Timeline  
Albemarle Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Albemarle Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Albemarle Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Sherwin-Williams 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Sherwin Williams Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Sherwin Williams may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Albemarle Corp and Sherwin Williams Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Albemarle Corp and Sherwin Williams

The main advantage of trading using opposite Albemarle Corp and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle Corp position performs unexpectedly, Sherwin Williams 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 Sherwin Williams will offset losses from the drop in Sherwin Williams' long position.
The idea behind Albemarle Corp and Sherwin Williams Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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