Correlation Between Alphabet and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and PPG Industries, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and PPG Industries.
Diversification Opportunities for Alphabet and PPG Industries
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alphabet and PPG is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and PPG Industries go up and down completely randomly.
Pair Corralation between Alphabet and PPG Industries
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.88 times more return on investment than PPG Industries. However, Alphabet is 1.88 times more volatile than PPG Industries. It trades about 0.07 of its potential returns per unit of risk. PPG Industries is currently generating about 0.04 per unit of risk. If you would invest 13,437 in Alphabet Inc Class C on September 4, 2024 and sell it today you would earn a total of 3,861 from holding Alphabet Inc Class C or generate 28.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Alphabet Inc Class C vs. PPG Industries
Performance |
| Timeline |
| Alphabet Class C |
| PPG Industries |
Alphabet and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and PPG Industries
The main advantage of trading using opposite Alphabet and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.| Alphabet vs. MediaAlpha | Alphabet vs. Asset Entities Class | Alphabet vs. Shutterstock | Alphabet vs. Match Group |
| PPG Industries vs. Cognizant Technology Solutions | PPG Industries vs. Samsung Electronics Co | PPG Industries vs. First Republic Bank | PPG Industries vs. New Oriental Education |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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