Correlation Between Sherwin Williams and Gevo

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

Diversification Opportunities for Sherwin Williams and Gevo

-0.59

Correlation Coefficient

Sherwin Williams  Gevo

Excellent diversification

The 3 months correlation between Sherwin and Gevo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Sherwin Williams and Gevo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gevo Inc 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 Gevo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gevo Inc has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Gevo go up and down completely randomly.

Pair Corralation between Sherwin Williams and Gevo

Assuming the 90 days horizon Sherwin Williams is expected to generate 2.15 times less return on investment than Gevo. But when comparing it to its historical volatility, The Sherwin Williams is 4.46 times less risky than Gevo. It trades about 0.07 of its potential returns per unit of risk. Gevo Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  192.00  in Gevo Inc on October 23, 2024 and sell it today you would earn a total of  18.00  from holding Gevo Inc or generate 9.38% return on investment over 90 days.

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

The Sherwin Williams  vs.  Gevo Inc

Sherwin Williams

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Sherwin Williams are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Gevo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sherwin Williams and Gevo

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

The idea behind The Sherwin Williams and Gevo Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.