Correlation Between DAX Index and Sherwin Williams

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

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

Diversification Opportunities for DAX Index and Sherwin Williams

0.14

Correlation Coefficient

DAX Index  Sherwin Williams

Average diversification

The 3 months correlation between DAX and Sherwin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and The Sherwin Williams in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams and DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and Sherwin Williams go up and down completely randomly.

Pair Corralation between DAX Index and Sherwin Williams

Assuming the 90 days trading horizon DAX Index is expected to generate 0.58 times more return on investment than Sherwin Williams. However, DAX Index is 1.71 times less risky than Sherwin Williams. It trades about 0.18 of its potential returns per unit of risk. The Sherwin Williams is currently generating about -0.02 per unit of risk. If you would invest  2,206,451  in DAX Index on April 24, 2025 and sell it today you would earn a total of  217,631  from holding DAX Index or generate 9.86% return on investment over 90 days.

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

DAX Index  vs.  The Sherwin Williams

Pair Trading with DAX Index and Sherwin Williams

The main advantage of trading using opposite DAX Index and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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 DAX Index 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.