Correlation Between Sherwin Williams and G6 Materials

Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and G6 Materials 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 G6 Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sherwin Williams Co and G6 Materials Corp, you can compare the effects of market volatilities on Sherwin Williams and G6 Materials 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 G6 Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and G6 Materials.

Diversification Opportunities for Sherwin Williams and G6 Materials

-0.54

Correlation Coefficient

Sherwin Williams  G6 Materials

Excellent diversification

The 3 months correlation between Sherwin and GPHBF is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and G6 Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G6 Materials Corp 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 Sherwin Williams Co are associated (or correlated) with G6 Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G6 Materials Corp has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and G6 Materials go up and down completely randomly.

Pair Corralation between Sherwin Williams and G6 Materials

Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.15 times more return on investment than G6 Materials. However, Sherwin Williams Co is 6.83 times less risky than G6 Materials. It trades about 0.1 of its potential returns per unit of risk. G6 Materials Corp is currently generating about -0.02 per unit of risk. If you would invest  28,921  in Sherwin Williams Co on September 4, 2024 and sell it today you would earn a total of  10,637  from holding Sherwin Williams Co or generate 36.78% return on investment over 90 days.

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

Sherwin Williams Co  vs.  G6 Materials Corp

Sherwin Williams

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sherwin Williams Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Sherwin Williams may actually be approaching a critical reversion point that can send shares even higher in January 2025.

G6 Materials Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G6 Materials Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sherwin Williams and G6 Materials

The main advantage of trading using opposite Sherwin Williams and G6 Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, G6 Materials 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 G6 Materials will offset losses from the drop in G6 Materials' long position.

The idea behind Sherwin Williams Co and G6 Materials Corp 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.