Correlation Between PPG Industries and Lanxess AG
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Lanxess AG 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 Lanxess AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Lanxess AG, you can compare the effects of market volatilities on PPG Industries and Lanxess AG 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 Lanxess AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Lanxess AG.
Diversification Opportunities for PPG Industries and Lanxess AG
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between PPG and Lanxess is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Lanxess AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanxess AG 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 Lanxess AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanxess AG has no effect on the direction of PPG Industries i.e., PPG Industries and Lanxess AG go up and down completely randomly.
Pair Corralation between PPG Industries and Lanxess AG
Considering the 90-day investment horizon PPG Industries is expected to generate 3.92 times more return on investment than Lanxess AG. However, PPG Industries is 3.92 times more volatile than Lanxess AG. It trades about 0.03 of its potential returns per unit of risk. Lanxess AG is currently generating about -0.22 per unit of risk. If you would invest 12,374 in PPG Industries on September 2, 2024 and sell it today you would earn a total of 63.00 from holding PPG Industries or generate 0.51% 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. Lanxess AG
Performance |
| Timeline |
| PPG Industries |
| Lanxess AG |
PPG Industries and Lanxess AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Lanxess AG
The main advantage of trading using opposite PPG Industries and Lanxess AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Lanxess AG 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 Lanxess AG will offset losses from the drop in Lanxess AG'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 |
| Lanxess AG vs. Sherwin Williams Co | Lanxess AG vs. Air Liquide SA | Lanxess AG vs. Air Products and | Lanxess AG 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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