Correlation Between Apollo Investment and Sherwin Williams

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

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

Diversification Opportunities for Apollo Investment and Sherwin Williams

0.51

Correlation Coefficient

Apollo Investment  Sherwin Williams

Very weak diversification

The 3 months correlation between Apollo and Sherwin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and The Sherwin Williams in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Apollo Investment 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 Apollo Investment Corp 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 Apollo Investment i.e., Apollo Investment and Sherwin Williams go up and down completely randomly.

Pair Corralation between Apollo Investment and Sherwin Williams

Assuming the 90 days trading horizon Apollo Investment is expected to generate 1.06 times less return on investment than Sherwin Williams. But when comparing it to its historical volatility, Apollo Investment Corp is 1.24 times less risky than Sherwin Williams. It trades about 0.07 of its potential returns per unit of risk. The Sherwin Williams is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  22,058  in The Sherwin Williams on October 5, 2024 and sell it today you would earn a total of  10,967  from holding The Sherwin Williams or generate 49.72% return on investment over 90 days.

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

Apollo Investment Corp  vs.  The Sherwin Williams

Apollo Investment Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Apollo Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sherwin Williams

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Sherwin Williams has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sherwin Williams is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apollo Investment and Sherwin Williams

The main advantage of trading using opposite Apollo Investment and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment 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 Apollo Investment Corp and The 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.