Correlation Between Air Products and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and PPG Industries, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and PPG Industries.
Diversification Opportunities for Air Products and PPG Industries
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and PPG is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Air Products 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 Air Products and 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 Air Products i.e., Air Products and PPG Industries go up and down completely randomly.
Pair Corralation between Air Products and PPG Industries
Considering the 90-day investment horizon Air Products and is expected to generate 1.07 times more return on investment than PPG Industries. However, Air Products is 1.07 times more volatile than PPG Industries. It trades about 0.2 of its potential returns per unit of risk. PPG Industries is currently generating about -0.16 per unit of risk. If you would invest 31,826 in Air Products and on August 27, 2024 and sell it today you would earn a total of 1,357 from holding Air Products and or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. PPG Industries
Performance |
| Timeline |
| Air Products |
| PPG Industries |
Air Products and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and PPG Industries
The main advantage of trading using opposite Air Products and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. PPG Industries | Air Products vs. Ecolab Inc | Air Products vs. Sherwin Williams Co | Air Products vs. LyondellBasell Industries NV |
| PPG Industries vs. Minerals Technologies | PPG Industries vs. Oil Dri | PPG Industries vs. H B Fuller | PPG Industries vs. Northern Technologies |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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