Correlation Between Sherwin Williams and Air Products

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

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

Diversification Opportunities for Sherwin Williams and Air Products

0.77

Correlation Coefficient

Sherwin Williams  Air Products

Poor diversification

The 3 months correlation between Sherwin and Air is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Sherwin Williams 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 Sherwin Williams Co are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Air Products go up and down completely randomly.

Pair Corralation between Sherwin Williams and Air Products

Considering the 90-day investment horizon Sherwin Williams Co is expected to under-perform the Air Products. But the stock apears to be less risky and, when comparing its historical volatility, Sherwin Williams Co is 1.08 times less risky than Air Products. The stock trades about -0.15 of its potential returns per unit of risk. The Air Products and is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  33,229  in Air Products and on November 28, 2024 and sell it today you would lose (2,290) from holding Air Products and or give up 6.89% of portfolio value over 90 days.

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

Sherwin Williams Co  vs.  Air Products and

Sherwin Williams

Risk-Adjusted Performance

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.

Air Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Products and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Sherwin Williams and Air Products

The main advantage of trading using opposite Sherwin Williams and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.

The idea behind Sherwin Williams Co and Air Products and 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.