Correlation Between Broadwind and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Broadwind and PPG Industries 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 Broadwind and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and PPG Industries, you can compare the effects of market volatilities on Broadwind and PPG Industries 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 Broadwind with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and PPG Industries.
Diversification Opportunities for Broadwind and PPG Industries
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Broadwind and PPG is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Broadwind 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 Broadwind are associated (or correlated) with PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Broadwind i.e., Broadwind and PPG Industries go up and down completely randomly.
Pair Corralation between Broadwind and PPG Industries
Assuming the 90 days trading horizon Broadwind is expected to under-perform the PPG Industries. In addition to that, Broadwind is 4.51 times more volatile than PPG Industries. It trades about -0.03 of its total potential returns per unit of risk. PPG Industries is currently generating about 0.05 per unit of volatility. If you would invest 11,408 in PPG Industries on August 31, 2024 and sell it today you would earn a total of 122.00 from holding PPG Industries or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadwind vs. PPG Industries
Performance |
| Timeline |
| Broadwind |
| PPG Industries |
Broadwind and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and PPG Industries
The main advantage of trading using opposite Broadwind and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' long position.| Broadwind vs. Transport International Holdings | Broadwind vs. Fukuyama Transporting Co | Broadwind vs. BOSTON BEER A | Broadwind vs. KAUFMAN ET BROAD |
| PPG Industries vs. PRECISION DRILLING P | PPG Industries vs. Apollo Investment Corp | PPG Industries vs. AWILCO DRILLING PLC | PPG Industries vs. SLR Investment Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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