Correlation Between Eastman Chemical and Sherwin Williams

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

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

Diversification Opportunities for Eastman Chemical and Sherwin Williams

0.08

Correlation Coefficient

Eastman Chemical  Sherwin Williams

Significant diversification

The 3 months correlation between Eastman and Sherwin is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Sherwin Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical i.e., Eastman Chemical and Sherwin Williams go up and down completely randomly.

Pair Corralation between Eastman Chemical and Sherwin Williams

Considering the 90-day investment horizon Eastman Chemical is expected to generate 1.03 times more return on investment than Sherwin Williams. However, Eastman Chemical is 1.03 times more volatile than Sherwin Williams Co. It trades about 0.01 of its potential returns per unit of risk. Sherwin Williams Co is currently generating about 0.0 per unit of risk. If you would invest  9,884  in Eastman Chemical on September 12, 2024 and sell it today you would earn a total of  48.00  from holding Eastman Chemical or generate 0.49% return on investment over 90 days.

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

Eastman Chemical  vs.  Sherwin Williams Co

Eastman Chemical

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Eastman Chemical is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Eastman Chemical and Sherwin Williams

The main advantage of trading using opposite Eastman Chemical and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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 Eastman Chemical 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.