Correlation Between Incitec Pivot and Sherwin Williams

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

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

Diversification Opportunities for Incitec Pivot and Sherwin Williams

0.23

Correlation Coefficient

Incitec Pivot  Sherwin Williams

Modest diversification

The 3 months correlation between Incitec and Sherwin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Incitec Pivot Ltd and Sherwin Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Incitec Pivot 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 Incitec Pivot Ltd 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 Incitec Pivot i.e., Incitec Pivot and Sherwin Williams go up and down completely randomly.

Pair Corralation between Incitec Pivot and Sherwin Williams

Assuming the 90 days horizon Incitec Pivot Ltd is expected to generate 2.69 times more return on investment than Sherwin Williams. However, Incitec Pivot is 2.69 times more volatile than Sherwin Williams Co. It trades about 0.2 of its potential returns per unit of risk. Sherwin Williams Co is currently generating about -0.67 per unit of risk. If you would invest  196.00  in Incitec Pivot Ltd on October 5, 2024 and sell it today you would earn a total of  25.00  from holding Incitec Pivot Ltd or generate 12.76% return on investment over 90 days.

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

Incitec Pivot Ltd  vs.  Sherwin Williams Co

Incitec Pivot

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Incitec Pivot Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Incitec Pivot showed solid returns over the last few months and may actually be approaching a breakup point.

Sherwin Williams

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sherwin Williams Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Incitec Pivot and Sherwin Williams

The main advantage of trading using opposite Incitec Pivot and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incitec Pivot 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 Incitec Pivot Ltd 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.