Correlation Between Ashland Global and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Ashland Global 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 Ashland Global and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashland Global Holdings and PPG Industries, you can compare the effects of market volatilities on Ashland Global 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 Ashland Global with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and PPG Industries.
Diversification Opportunities for Ashland Global and PPG Industries
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ashland and PPG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Ashland Global 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 Ashland Global Holdings 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 Ashland Global i.e., Ashland Global and PPG Industries go up and down completely randomly.
Pair Corralation between Ashland Global and PPG Industries
Considering the 90-day investment horizon Ashland Global Holdings is expected to under-perform the PPG Industries. In addition to that, Ashland Global is 1.3 times more volatile than PPG Industries. It trades about -0.13 of its total potential returns per unit of risk. PPG Industries is currently generating about -0.03 per unit of volatility. If you would invest 12,621 in PPG Industries on August 24, 2024 and sell it today you would lose (353.00) from holding PPG Industries or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashland Global Holdings vs. PPG Industries
Performance |
| Timeline |
| Ashland Global Holdings |
| PPG Industries |
Ashland Global and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashland Global and PPG Industries
The main advantage of trading using opposite Ashland Global and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global 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.| Ashland Global vs. H B Fuller | Ashland Global vs. Element Solutions | Ashland Global vs. Balchem | Ashland Global vs. Avantor |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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