Correlation Between Sherwin Williams and Kronos Worldwide

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

Diversification Opportunities for Sherwin Williams and Kronos Worldwide

0.26

Correlation Coefficient

Sherwin Williams  Kronos Worldwide

Modest diversification

The 3 months correlation between Sherwin and Kronos is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Kronos Worldwide go up and down completely randomly.

Pair Corralation between Sherwin Williams and Kronos Worldwide

Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.58 times more return on investment than Kronos Worldwide. However, Sherwin Williams Co is 1.72 times less risky than Kronos Worldwide. It trades about 0.03 of its potential returns per unit of risk. Kronos Worldwide is currently generating about -0.15 per unit of risk. If you would invest  33,801  in Sherwin Williams Co on December 28, 2024 and sell it today you would earn a total of  764.00  from holding Sherwin Williams Co or generate 2.26% return on investment over 90 days.

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

Sherwin Williams Co  vs.  Kronos Worldwide

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 2 (%) 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kronos Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kronos Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sherwin Williams and Kronos Worldwide

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

The idea behind Sherwin Williams Co and Kronos Worldwide 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.