Correlation Between Sherwin Williams and International Flavors
Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and International Flavors 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 International Flavors 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 International Flavors Fragrances, you can compare the effects of market volatilities on Sherwin Williams and International Flavors 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 International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and International Flavors.
Diversification Opportunities for Sherwin Williams and International Flavors
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sherwin and International is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors 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 International Flavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Flavors has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and International Flavors go up and down completely randomly.
Pair Corralation between Sherwin Williams and International Flavors
Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 1.16 times more return on investment than International Flavors. However, Sherwin Williams is 1.16 times more volatile than International Flavors Fragrances. It trades about -0.1 of its potential returns per unit of risk. International Flavors Fragrances is currently generating about -0.15 per unit of risk. If you would invest 39,558 in Sherwin Williams Co on December 2, 2024 and sell it today you would lose (3,331) from holding Sherwin Williams Co or give up 8.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sherwin Williams Co vs. International Flavors Fragranc
Performance |
Timeline |
Sherwin Williams |
International Flavors |
Sherwin Williams and International Flavors Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sherwin Williams and International Flavors
The main advantage of trading using opposite Sherwin Williams and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, International Flavors 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 International Flavors will offset losses from the drop in International Flavors' long position.Sherwin Williams vs. Air Products and | Sherwin Williams vs. Linde plc Ordinary | Sherwin Williams vs. Ecolab Inc | Sherwin Williams vs. RPM International |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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