Correlation Between LyondellBasell Industries and Sherwin Williams
Can any of the company-specific risk be diversified away by investing in both LyondellBasell Industries 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 LyondellBasell Industries and Sherwin Williams into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LyondellBasell Industries NV and Sherwin Williams Co, you can compare the effects of market volatilities on LyondellBasell Industries 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 LyondellBasell Industries with a short position of Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of LyondellBasell Industries and Sherwin Williams.
Diversification Opportunities for LyondellBasell Industries and Sherwin Williams
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LyondellBasell and Sherwin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LyondellBasell Industries NV and Sherwin Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and LyondellBasell Industries 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 LyondellBasell Industries NV 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 LyondellBasell Industries i.e., LyondellBasell Industries and Sherwin Williams go up and down completely randomly.
Pair Corralation between LyondellBasell Industries and Sherwin Williams
Considering the 90-day investment horizon LyondellBasell Industries NV is expected to generate 0.96 times more return on investment than Sherwin Williams. However, LyondellBasell Industries NV is 1.04 times less risky than Sherwin Williams. It trades about -0.07 of its potential returns per unit of risk. Sherwin Williams Co is currently generating about -0.44 per unit of risk. If you would invest 10,207 in LyondellBasell Industries NV on February 1, 2024 and sell it today you would lose (210.00) from holding LyondellBasell Industries NV or give up 2.06% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LyondellBasell Industries NV vs. Sherwin Williams Co
Performance |
Timeline |
LyondellBasell Industries |
Sherwin Williams |
LyondellBasell Industries and Sherwin Williams Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LyondellBasell Industries and Sherwin Williams
The main advantage of trading using opposite LyondellBasell Industries and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LyondellBasell Industries 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.LyondellBasell Industries vs. H B Fuller | LyondellBasell Industries vs. Minerals Technologies | LyondellBasell Industries vs. Quaker Chemical | LyondellBasell Industries vs. Oil Dri |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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