Correlation Between PPG Industries and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Minerals Technologies 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 Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Minerals Technologies, you can compare the effects of market volatilities on PPG Industries and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Minerals Technologies.
Diversification Opportunities for PPG Industries and Minerals Technologies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPG and Minerals is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of PPG Industries i.e., PPG Industries and Minerals Technologies go up and down completely randomly.
Pair Corralation between PPG Industries and Minerals Technologies
Considering the 90-day investment horizon PPG Industries is expected to under-perform the Minerals Technologies. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 1.3 times less risky than Minerals Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Minerals Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,012 in Minerals Technologies on November 19, 2024 and sell it today you would earn a total of 1,149 from holding Minerals Technologies or generate 19.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. Minerals Technologies
Performance |
| Timeline |
| PPG Industries |
| Minerals Technologies |
PPG Industries and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Minerals Technologies
The main advantage of trading using opposite PPG Industries and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' 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 |
| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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