Correlation Between Trinseo SA and Sherwin Williams

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

By analyzing existing cross correlation between Trinseo SA and Sherwin Williams Co, you can compare the effects of market volatilities on Trinseo SA and Sherwin Williams 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 Trinseo SA with a short position of Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trinseo SA and Sherwin Williams.

Diversification Opportunities for Trinseo SA and Sherwin Williams

-0.04

Correlation Coefficient

Trinseo SA  Sherwin Williams

Good diversification

The 3 months correlation between Trinseo and Sherwin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Trinseo SA and Sherwin Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Trinseo SA 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 Trinseo SA are associated (or correlated) with Sherwin Williams. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherwin Williams has no effect on the direction of Trinseo SA i.e., Trinseo SA and Sherwin Williams go up and down completely randomly.

Pair Corralation between Trinseo SA and Sherwin Williams

Considering the 90-day investment horizon Trinseo SA is expected to under-perform the Sherwin Williams. In addition to that, Trinseo SA is 3.59 times more volatile than Sherwin Williams Co. It trades about -0.07 of its total potential returns per unit of risk. Sherwin Williams Co is currently generating about -0.01 per unit of volatility. If you would invest  34,476  in Sherwin Williams Co on December 26, 2024 and sell it today you would lose (360.00) from holding Sherwin Williams Co or give up 1.04% of portfolio value over 90 days.

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

Trinseo SA  vs.  Sherwin Williams Co

Trinseo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trinseo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sherwin Williams

Risk-Adjusted Performance

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.

Pair Trading with Trinseo SA and Sherwin Williams

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

The idea behind Trinseo SA and Sherwin Williams Co 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.