Correlation Between Croda International and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Croda International 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 Croda International and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Croda International PLC and PPG Industries, you can compare the effects of market volatilities on Croda International 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 Croda International with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Croda International and PPG Industries.
Diversification Opportunities for Croda International and PPG Industries
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Croda and PPG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Croda International PLC and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Croda International 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 Croda International PLC 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 Croda International i.e., Croda International and PPG Industries go up and down completely randomly.
Pair Corralation between Croda International and PPG Industries
Assuming the 90 days horizon Croda International PLC is expected to under-perform the PPG Industries. In addition to that, Croda International is 1.64 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 0.01 per unit of volatility. If you would invest 12,451 in PPG Industries on September 1, 2024 and sell it today you would lose (14.00) from holding PPG Industries or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Croda International PLC vs. PPG Industries
Performance |
| Timeline |
| Croda International PLC |
| PPG Industries |
Croda International and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Croda International and PPG Industries
The main advantage of trading using opposite Croda International and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Croda International 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.| Croda International vs. PPG Industries | Croda International vs. Ecolab Inc | Croda International vs. Sherwin Williams Co | Croda International vs. Air Products and |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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