Correlation Between PPG Industries and RPM International
Can any of the company-specific risk be diversified away by investing in both PPG Industries and RPM International 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 RPM International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and RPM International, you can compare the effects of market volatilities on PPG Industries and RPM International 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 RPM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and RPM International.
Diversification Opportunities for PPG Industries and RPM International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPG and RPM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and RPM International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPM International 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 RPM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPM International has no effect on the direction of PPG Industries i.e., PPG Industries and RPM International go up and down completely randomly.
Pair Corralation between PPG Industries and RPM International
Considering the 90-day investment horizon PPG Industries is expected to generate 1.15 times more return on investment than RPM International. However, PPG Industries is 1.15 times more volatile than RPM International. It trades about 0.13 of its potential returns per unit of risk. RPM International is currently generating about 0.15 per unit of risk. If you would invest 11,909 in PPG Industries on October 29, 2024 and sell it today you would earn a total of 369.00 from holding PPG Industries or generate 3.1% 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. RPM International
Performance |
| Timeline |
| PPG Industries |
| RPM International |
PPG Industries and RPM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and RPM International
The main advantage of trading using opposite PPG Industries and RPM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, RPM International 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 RPM International will offset losses from the drop in RPM International'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 |
| RPM International vs. Innospec | RPM International vs. Minerals Technologies | RPM International vs. Oil Dri | RPM International vs. Quaker Chemical |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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