Correlation Between Air Liquide and Sherwin Williams

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

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

Diversification Opportunities for Air Liquide and Sherwin Williams

-0.5

Correlation Coefficient

Air Liquide  Sherwin Williams

Very good diversification

The 3 months correlation between Air and Sherwin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and The Sherwin Williams in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Air Liquide 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 Air Liquide SA 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 Air Liquide i.e., Air Liquide and Sherwin Williams go up and down completely randomly.

Pair Corralation between Air Liquide and Sherwin Williams

Assuming the 90 days trading horizon Air Liquide SA is expected to generate 0.6 times more return on investment than Sherwin Williams. However, Air Liquide SA is 1.66 times less risky than Sherwin Williams. It trades about -0.19 of its potential returns per unit of risk. The Sherwin Williams is currently generating about -0.46 per unit of risk. If you would invest  16,030  in Air Liquide SA on September 23, 2024 and sell it today you would lose (494.00) from holding Air Liquide SA or give up 3.08% of portfolio value over 90 days.

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

Air Liquide SA  vs.  The Sherwin Williams

Air Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air Liquide and Sherwin Williams

The main advantage of trading using opposite Air Liquide and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide 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 Air Liquide SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.