Correlation Between Laureate Education and Sherwin Williams

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

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

Diversification Opportunities for Laureate Education and Sherwin Williams

0.85

Correlation Coefficient

Laureate Education  Sherwin Williams

Very poor diversification

The 3 months correlation between Laureate and Sherwin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and The Sherwin Williams in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and Sherwin Williams go up and down completely randomly.

Pair Corralation between Laureate Education and Sherwin Williams

Assuming the 90 days trading horizon Laureate Education is expected to generate 1.55 times more return on investment than Sherwin Williams. However, Laureate Education is 1.55 times more volatile than The Sherwin Williams. It trades about 0.28 of its potential returns per unit of risk. The Sherwin Williams is currently generating about 0.27 per unit of risk. If you would invest  1,530  in Laureate Education on September 5, 2024 and sell it today you would earn a total of  250.00  from holding Laureate Education or generate 16.34% return on investment over 90 days.

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

Laureate Education  vs.  The Sherwin Williams

Laureate Education

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laureate Education are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laureate Education reported solid returns over the last few months and may actually be approaching a breakup point.

Sherwin Williams

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Sherwin Williams are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sherwin Williams reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laureate Education and Sherwin Williams

The main advantage of trading using opposite Laureate Education and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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 Laureate Education 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.