Correlation Between Sherwin Williams and Albemarle

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Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Albemarle 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 Albemarle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Sherwin Williams and Albemarle, you can compare the effects of market volatilities on Sherwin Williams and Albemarle 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 Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Albemarle.

Diversification Opportunities for Sherwin Williams and Albemarle

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Sherwin and Albemarle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Sherwin Williams and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 The Sherwin Williams are associated (or correlated) with Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Albemarle go up and down completely randomly.

Pair Corralation between Sherwin Williams and Albemarle

If you would invest  7,105  in Albemarle on September 7, 2024 and sell it today you would earn a total of  2,514  from holding Albemarle or generate 35.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

The Sherwin Williams  vs.  Albemarle

 Performance 
       Timeline  
Sherwin Williams 

Risk-Adjusted Performance

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Weak
 
Strong
OK
Over the last 90 days The Sherwin Williams has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sherwin Williams is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Albemarle 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Albemarle reported solid returns over the last few months and may actually be approaching a breakup point.

Sherwin Williams and Albemarle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sherwin Williams and Albemarle

The main advantage of trading using opposite Sherwin Williams and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sherwin Williams position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.
The idea behind The Sherwin Williams and Albemarle 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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