Correlation Between Sika AG and Sherwin Williams
Can any of the company-specific risk be diversified away by investing in both Sika AG 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 Sika AG and Sherwin Williams into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG ADR and Sherwin Williams Co, you can compare the effects of market volatilities on Sika AG 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 Sika AG with a short position of Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Sherwin Williams.
Diversification Opportunities for Sika AG and Sherwin Williams
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sika and Sherwin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG ADR and Sherwin Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Sika AG 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 Sika AG 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 Sika AG i.e., Sika AG and Sherwin Williams go up and down completely randomly.
Pair Corralation between Sika AG and Sherwin Williams
Assuming the 90 days horizon Sika AG is expected to generate 1.2 times less return on investment than Sherwin Williams. In addition to that, Sika AG is 1.27 times more volatile than Sherwin Williams Co. It trades about 0.05 of its total potential returns per unit of risk. Sherwin Williams Co is currently generating about 0.07 per unit of volatility. If you would invest 21,260 in Sherwin Williams Co on January 26, 2024 and sell it today you would earn a total of 9,113 from holding Sherwin Williams Co or generate 42.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sika AG ADR vs. Sherwin Williams Co
Performance |
Timeline |
Sika AG ADR |
Sherwin Williams |
Sika AG and Sherwin Williams Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sika AG and Sherwin Williams
The main advantage of trading using opposite Sika AG and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG 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.Sika AG vs. Air Liquide SA | Sika AG vs. Sherwin Williams Co | Sika AG vs. Ecolab Inc | Sika AG vs. Air Products and |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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