Correlation Between Arkema SA and Sherwin Williams

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

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

Diversification Opportunities for Arkema SA and Sherwin Williams

0.21

Correlation Coefficient

Arkema SA  Sherwin Williams

Modest diversification

The 3 months correlation between Arkema and Sherwin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA 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 Arkema SA 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 Arkema SA 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 Arkema SA i.e., Arkema SA and Sherwin Williams go up and down completely randomly.

Pair Corralation between Arkema SA and Sherwin Williams

Assuming the 90 days horizon Arkema SA ADR is expected to generate 1.94 times more return on investment than Sherwin Williams. However, Arkema SA is 1.94 times more volatile than Sherwin Williams Co. It trades about 0.05 of its potential returns per unit of risk. Sherwin Williams Co is currently generating about 0.01 per unit of risk. If you would invest  7,485  in Arkema SA ADR on December 28, 2024 and sell it today you would earn a total of  462.00  from holding Arkema SA ADR or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Arkema SA ADR  vs.  Sherwin Williams Co

Arkema SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arkema SA ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Arkema SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sherwin Williams

Risk-Adjusted Performance

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Arkema SA and Sherwin Williams

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

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.