Correlation Between Sherwin Williams and Novozymes

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

Diversification Opportunities for Sherwin Williams and Novozymes

-0.29

Correlation Coefficient

Sherwin Williams  Novozymes

Very good diversification

The 3 months correlation between Sherwin and Novozymes is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Novozymes AS B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novozymes AS B 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 Novozymes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novozymes AS B has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Novozymes go up and down completely randomly.

Pair Corralation between Sherwin Williams and Novozymes

Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.54 times more return on investment than Novozymes. However, Sherwin Williams Co is 1.86 times less risky than Novozymes. It trades about 0.01 of its potential returns per unit of risk. Novozymes AS B is currently generating about -0.08 per unit of risk. If you would invest  37,328  in Sherwin Williams Co on September 12, 2024 and sell it today you would earn a total of  38.50  from holding Sherwin Williams Co or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sherwin Williams Co  vs.  Novozymes AS B

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 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.

Novozymes AS B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novozymes AS B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sherwin Williams and Novozymes

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

The idea behind Sherwin Williams Co and Novozymes AS B 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.