Correlation Between Arkema ADR and Sherwin Williams

By analyzing existing cross correlation between Arkema ADR and Sherwin-Williams, you can compare the effects of market volatilities on Arkema ADR 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 Arkema ADR with a short position of Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema ADR and Sherwin Williams.

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Can any of the company-specific risk be diversified away by investing in both Arkema ADR 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 Arkema ADR and Sherwin Williams into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Arkema ADR and Sherwin Williams

0.55
  Correlation Coefficient
Arkema ADR
Sherwin-Williams

Very weak diversification

The 3 months correlation between Arkema and Sherwin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Arkema ADR and Sherwin-Williams in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Sherwin-Williams and Arkema ADR 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 Arkema ADR 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 Arkema ADR i.e., Arkema ADR and Sherwin Williams go up and down completely randomly.

Pair Corralation between Arkema ADR and Sherwin Williams

Assuming the 90 days horizon Arkema ADR is expected to generate 1.16 times less return on investment than Sherwin Williams. In addition to that, Arkema ADR is 1.23 times more volatile than Sherwin-Williams. It trades about 0.05 of its total potential returns per unit of risk. Sherwin-Williams is currently generating about 0.07 per unit of volatility. If you would invest  19,442  in Sherwin-Williams on September 10, 2021 and sell it today you would earn a total of  14,780  from holding Sherwin-Williams or generate 76.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Arkema ADR  vs.  Sherwin-Williams

 Performance (%) 
      Timeline 
Arkema ADR 
Arkema Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Arkema ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Arkema ADR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Arkema Price Channel

Sherwin-Williams 
Sherwin Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sherwin-Williams are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Sherwin Williams showed solid returns over the last few months and may actually be approaching a breakup point.

Sherwin Price Channel

Arkema ADR and Sherwin Williams Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Arkema ADR and Sherwin Williams

The main advantage of trading using opposite Arkema ADR and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema ADR 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 Arkema ADR and Sherwin-Williams 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.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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