Correlation Between Akzo Nobel and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Akzo Nobel 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 Akzo Nobel and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akzo Nobel NV and PPG Industries, you can compare the effects of market volatilities on Akzo Nobel 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 Akzo Nobel with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akzo Nobel and PPG Industries.
Diversification Opportunities for Akzo Nobel and PPG Industries
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Akzo and PPG is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Akzo Nobel NV and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Akzo Nobel 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 Akzo Nobel NV 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 Akzo Nobel i.e., Akzo Nobel and PPG Industries go up and down completely randomly.
Pair Corralation between Akzo Nobel and PPG Industries
Assuming the 90 days horizon Akzo Nobel NV is expected to generate 1.76 times more return on investment than PPG Industries. However, Akzo Nobel is 1.76 times more volatile than PPG Industries. It trades about 0.01 of its potential returns per unit of risk. PPG Industries is currently generating about -0.2 per unit of risk. If you would invest 6,402 in Akzo Nobel NV on November 27, 2024 and sell it today you would lose (12.00) from holding Akzo Nobel NV or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akzo Nobel NV vs. PPG Industries
Performance |
| Timeline |
| Akzo Nobel NV |
| PPG Industries |
Akzo Nobel and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akzo Nobel and PPG Industries
The main advantage of trading using opposite Akzo Nobel and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akzo Nobel 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.| Akzo Nobel vs. Avoca LLC | Akzo Nobel vs. AGC Inc ADR | Akzo Nobel vs. Arkema SA ADR | Akzo Nobel vs. AirBoss of America |
| PPG Industries vs. Air Products and | PPG Industries vs. Linde plc Ordinary | PPG Industries vs. Ecolab Inc | PPG Industries vs. LyondellBasell Industries NV |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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