Correlation Between Sherwin Williams and Cabot

Can any of the company-specific risk be diversified away by investing in both Sherwin Williams and Cabot 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 Cabot 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 Cabot, you can compare the effects of market volatilities on Sherwin Williams and Cabot 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 Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sherwin Williams and Cabot.

Diversification Opportunities for Sherwin Williams and Cabot

0.58

Correlation Coefficient

Sherwin Williams  Cabot

Very weak diversification

The 3 months correlation between Sherwin and Cabot is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sherwin Williams Co and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot 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 Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Sherwin Williams i.e., Sherwin Williams and Cabot go up and down completely randomly.

Pair Corralation between Sherwin Williams and Cabot

Considering the 90-day investment horizon Sherwin Williams Co is expected to generate 0.67 times more return on investment than Cabot. However, Sherwin Williams Co is 1.49 times less risky than Cabot. It trades about 0.11 of its potential returns per unit of risk. Cabot is currently generating about 0.07 per unit of risk. If you would invest  24,178  in Sherwin Williams Co on September 2, 2024 and sell it today you would earn a total of  15,562  from holding Sherwin Williams Co or generate 64.36% return on investment over 90 days.

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

Sherwin Williams Co  vs.  Cabot

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.

Cabot

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cabot are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Cabot may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sherwin Williams and Cabot

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

The idea behind Sherwin Williams Co and Cabot 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.