Correlation Between Sherwin Williams and AGC

Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and AGC 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 AGC 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 AGC Inc ADR, you can compare the effects of market volatilities on Sherwin Williams and AGC 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 AGC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and AGC.

Diversification Opportunities for Sherwin Williams and AGC

0.52

Correlation Coefficient

Sherwin Williams  AGC

Very weak diversification

The 3 months correlation between Sherwin and AGC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and AGC Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGC Inc ADR 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 AGC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGC Inc ADR has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and AGC go up and down completely randomly.

Pair Corralation between Sherwin Williams and AGC

Considering the 90-day investment horizon Sherwin Williams is expected to generate 4.84 times less return on investment than AGC. But when comparing it to its historical volatility, Sherwin Williams Co is 2.65 times less risky than AGC. It trades about 0.05 of its potential returns per unit of risk. AGC Inc ADR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  564.00  in AGC Inc ADR on December 2, 2024 and sell it today you would earn a total of  30.00  from holding AGC Inc ADR or generate 5.32% return on investment over 90 days.

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

Sherwin Williams Co  vs.  AGC Inc ADR

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.

AGC Inc ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGC Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, AGC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sherwin Williams and AGC

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

The idea behind Sherwin Williams Co and AGC Inc ADR 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.