Correlation Between PPG Industries and Akzo Nobel
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Akzo Nobel 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 Akzo Nobel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Akzo Nobel NV, you can compare the effects of market volatilities on PPG Industries and Akzo Nobel 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 Akzo Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Akzo Nobel.
Diversification Opportunities for PPG Industries and Akzo Nobel
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PPG and Akzo is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Akzo Nobel NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akzo Nobel NV 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 Akzo Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akzo Nobel NV has no effect on the direction of PPG Industries i.e., PPG Industries and Akzo Nobel go up and down completely randomly.
Pair Corralation between PPG Industries and Akzo Nobel
Considering the 90-day investment horizon PPG Industries is expected to under-perform the Akzo Nobel. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 1.76 times less risky than Akzo Nobel. The stock trades about -0.2 of its potential returns per unit of risk. The Akzo Nobel NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,402 in Akzo Nobel NV on November 27, 2024 and sell it today you would lose (12.00) from holding Akzo Nobel NV or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. Akzo Nobel NV
Performance |
| Timeline |
| PPG Industries |
| Akzo Nobel NV |
PPG Industries and Akzo Nobel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Akzo Nobel
The main advantage of trading using opposite PPG Industries and Akzo Nobel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Akzo Nobel 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 Akzo Nobel will offset losses from the drop in Akzo Nobel's long position.| PPG Industries vs. Air Products and | PPG Industries vs. Linde plc Ordinary | PPG Industries vs. Ecolab Inc | PPG Industries vs. LyondellBasell Industries NV |
| Akzo Nobel vs. Avoca LLC | Akzo Nobel vs. AGC Inc ADR | Akzo Nobel vs. Arkema SA ADR | Akzo Nobel vs. AirBoss of America |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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