Correlation Between United States and Sherwin Williams

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

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

Diversification Opportunities for United States and Sherwin Williams

-0.31

Correlation Coefficient

United States  Sherwin Williams

Very good diversification

The 3 months correlation between United and Sherwin is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Sherwin Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and United States 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 United States Steel 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 United States i.e., United States and Sherwin Williams go up and down completely randomly.

Pair Corralation between United States and Sherwin Williams

Taking into account the 90-day investment horizon United States Steel is expected to generate 2.7 times more return on investment than Sherwin Williams. However, United States is 2.7 times more volatile than Sherwin Williams Co. It trades about 0.07 of its potential returns per unit of risk. Sherwin Williams Co is currently generating about 0.1 per unit of risk. If you would invest  2,273  in United States Steel on January 26, 2024 and sell it today you would earn a total of  1,387  from holding United States Steel or generate 61.02% return on investment over 90 days.

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

United States Steel  vs.  Sherwin Williams Co

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Sherwin Williams

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sherwin Williams Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with United States and Sherwin Williams

The main advantage of trading using opposite United States and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.