Correlation Between Sherwin Williams and Toyobo Co

Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Toyobo Co 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 Toyobo Co 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 Toyobo Co Ltd, you can compare the effects of market volatilities on Sherwin Williams and Toyobo Co 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 Toyobo Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Toyobo Co.

Diversification Opportunities for Sherwin Williams and Toyobo Co

0.51

Correlation Coefficient

Sherwin Williams  Toyobo Co

Very weak diversification

The 3 months correlation between Sherwin and Toyobo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Toyobo Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyobo Co 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 Toyobo Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyobo Co has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Toyobo Co go up and down completely randomly.

Pair Corralation between Sherwin Williams and Toyobo Co

Considering the 90-day investment horizon Sherwin Williams Co is expected to under-perform the Toyobo Co. In addition to that, Sherwin Williams is 1.44 times more volatile than Toyobo Co Ltd. It trades about -0.38 of its total potential returns per unit of risk. Toyobo Co Ltd is currently generating about -0.22 per unit of volatility. If you would invest  749.00  in Toyobo Co Ltd on January 29, 2024 and sell it today you would lose (29.00) from holding Toyobo Co Ltd or give up 3.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sherwin Williams Co  vs.  Toyobo Co Ltd

Sherwin Williams

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sherwin Williams Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical indicators, Sherwin Williams is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Toyobo Co

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Toyobo Co Ltd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Toyobo Co is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sherwin Williams and Toyobo Co

The main advantage of trading using opposite Sherwin Williams and Toyobo Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Toyobo Co 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 Toyobo Co will offset losses from the drop in Toyobo Co's long position.

The idea behind Sherwin Williams Co and Toyobo Co Ltd 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.