Correlation Between PPG Industries and IMCD NV
Can any of the company-specific risk be diversified away by investing in both PPG Industries and IMCD NV 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 IMCD NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and IMCD NV, you can compare the effects of market volatilities on PPG Industries and IMCD NV 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 IMCD NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and IMCD NV.
Diversification Opportunities for PPG Industries and IMCD NV
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPG and IMCD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and IMCD NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMCD 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 IMCD NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMCD NV has no effect on the direction of PPG Industries i.e., PPG Industries and IMCD NV go up and down completely randomly.
Pair Corralation between PPG Industries and IMCD NV
Considering the 90-day investment horizon PPG Industries is expected to under-perform the IMCD NV. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 1.58 times less risky than IMCD NV. The stock trades about -0.01 of its potential returns per unit of risk. The IMCD NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 15,216 in IMCD NV on September 19, 2024 and sell it today you would lose (16.00) from holding IMCD NV or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
PPG Industries vs. IMCD NV
Performance |
| Timeline |
| PPG Industries |
| IMCD NV |
PPG Industries and IMCD NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and IMCD NV
The main advantage of trading using opposite PPG Industries and IMCD NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, IMCD NV 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 IMCD NV will offset losses from the drop in IMCD NV's long position.| PPG Industries vs. LyondellBasell Industries NV | PPG Industries vs. Cabot | PPG Industries vs. Westlake Chemical | PPG Industries vs. Air Products and |
| IMCD NV vs. Air Products and | IMCD NV vs. PPG Industries | IMCD NV vs. Sherwin Williams Co | IMCD NV vs. Ecolab Inc |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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