Correlation Between Sherwin Williams and Linde PLC

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

By analyzing existing cross correlation between The Sherwin Williams and Linde PLC, you can compare the effects of market volatilities on Sherwin Williams and Linde PLC 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 Linde PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Linde PLC.

Diversification Opportunities for Sherwin Williams and Linde PLC

0.5

Correlation Coefficient

Sherwin Williams  Linde PLC

Very weak diversification

The 3 months correlation between Sherwin and Linde is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Sherwin Williams and Linde PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde PLC 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 The Sherwin Williams are associated (or correlated) with Linde PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde PLC has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Linde PLC go up and down completely randomly.

Pair Corralation between Sherwin Williams and Linde PLC

Assuming the 90 days horizon The Sherwin Williams is expected to under-perform the Linde PLC. In addition to that, Sherwin Williams is 1.63 times more volatile than Linde PLC. It trades about -0.01 of its total potential returns per unit of risk. Linde PLC is currently generating about 0.08 per unit of volatility. If you would invest  40,685  in Linde PLC on December 31, 2024 and sell it today you would earn a total of  1,915  from holding Linde PLC or generate 4.71% return on investment over 90 days.

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

The Sherwin Williams  vs.  Linde PLC

Sherwin Williams

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Sherwin Williams has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sherwin Williams is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Linde PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Linde PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Linde PLC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sherwin Williams and Linde PLC

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

The idea behind The Sherwin Williams and Linde PLC 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.