Correlation Between PPG Industries and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Verizon Communications 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 PPG Industries and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Verizon Communications, you can compare the effects of market volatilities on PPG Industries and Verizon Communications 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 PPG Industries with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Verizon Communications.
Diversification Opportunities for PPG Industries and Verizon Communications
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between PPG and Verizon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and PPG Industries 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 PPG Industries are associated (or correlated) with Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of PPG Industries i.e., PPG Industries and Verizon Communications go up and down completely randomly.
Pair Corralation between PPG Industries and Verizon Communications
Assuming the 90 days trading horizon PPG Industries is expected to generate 126.62 times less return on investment than Verizon Communications. But when comparing it to its historical volatility, PPG Industries is 329.76 times less risky than Verizon Communications. It trades about 0.22 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 83,200 in Verizon Communications on September 12, 2024 and sell it today you would earn a total of 2,601 from holding Verizon Communications or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. Verizon Communications
Performance |
| Timeline |
| PPG Industries |
| Verizon Communications |
PPG Industries and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Verizon Communications
The main advantage of trading using opposite PPG Industries and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| PPG Industries vs. Verizon Communications | PPG Industries vs. UnitedHealth Group Incorporated | PPG Industries vs. Monster Beverage Corp | PPG Industries vs. DXC Technology |
| Verizon Communications vs. UnitedHealth Group Incorporated | Verizon Communications vs. Micron Technology | Verizon Communications vs. United States Steel | Verizon Communications vs. Applied Materials |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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