Correlation Between PPG Industries and Hawkins
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Hawkins 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 Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Hawkins, you can compare the effects of market volatilities on PPG Industries and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Hawkins.
Diversification Opportunities for PPG Industries and Hawkins
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between PPG and Hawkins is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of PPG Industries i.e., PPG Industries and Hawkins go up and down completely randomly.
Pair Corralation between PPG Industries and Hawkins
Considering the 90-day investment horizon PPG Industries is expected to under-perform the Hawkins. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 2.03 times less risky than Hawkins. The stock trades about -0.01 of its potential returns per unit of risk. The Hawkins is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,909 in Hawkins on September 25, 2024 and sell it today you would earn a total of 8,600 from holding Hawkins or generate 220.02% 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. Hawkins
Performance |
| Timeline |
| PPG Industries |
| Hawkins |
PPG Industries and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Hawkins
The main advantage of trading using opposite PPG Industries and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.The idea behind PPG Industries and Hawkins pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hawkins vs. International Flavors Fragrances | Hawkins vs. Air Products and | Hawkins vs. Linde plc Ordinary | Hawkins vs. PPG Industries |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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