Correlation Between Dupont De and Sherwin Williams

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

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

Diversification Opportunities for Dupont De and Sherwin Williams

0.54

Correlation Coefficient

Dupont De  Sherwin Williams

Very weak diversification

The 3 months correlation between Dupont and Sherwin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and The Sherwin Williams in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Dupont De 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 Dupont De Nemours 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 Dupont De i.e., Dupont De and Sherwin Williams go up and down completely randomly.

Pair Corralation between Dupont De and Sherwin Williams

Assuming the 90 days trading horizon Dupont De Nemours is expected to generate 0.85 times more return on investment than Sherwin Williams. However, Dupont De Nemours is 1.18 times less risky than Sherwin Williams. It trades about 0.1 of its potential returns per unit of risk. The Sherwin Williams is currently generating about 0.06 per unit of risk. If you would invest  7,213  in Dupont De Nemours on September 12, 2024 and sell it today you would earn a total of  787.00  from holding Dupont De Nemours or generate 10.91% return on investment over 90 days.

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

Dupont De Nemours  vs.  The Sherwin Williams

Dupont De Nemours

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Dupont De may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sherwin Williams

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Sherwin Williams are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sherwin Williams may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dupont De and Sherwin Williams

The main advantage of trading using opposite Dupont De and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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 Dupont De Nemours and The Sherwin Williams 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.