Correlation Between Olin and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Olin 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 Olin and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olin Corporation and PPG Industries, you can compare the effects of market volatilities on Olin 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 Olin with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olin and PPG Industries.
Diversification Opportunities for Olin and PPG Industries
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Olin and PPG is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Olin Corp. and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Olin 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 Olin Corporation 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 Olin i.e., Olin and PPG Industries go up and down completely randomly.
Pair Corralation between Olin and PPG Industries
Considering the 90-day investment horizon Olin Corporation is expected to under-perform the PPG Industries. In addition to that, Olin is 2.5 times more volatile than PPG Industries. It trades about -0.11 of its total potential returns per unit of risk. PPG Industries is currently generating about -0.1 per unit of volatility. If you would invest 12,560 in PPG Industries on August 24, 2024 and sell it today you would lose (292.00) from holding PPG Industries or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olin Corp. vs. PPG Industries
Performance |
| Timeline |
| Olin |
| PPG Industries |
Olin and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olin and PPG Industries
The main advantage of trading using opposite Olin and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olin 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.| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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