Correlation Between PPG Industries and Sherwin Williams
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Sherwin Williams 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 Sherwin Williams into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Sherwin Williams Co, you can compare the effects of market volatilities on PPG Industries and Sherwin Williams 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 Sherwin Williams. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Sherwin Williams.
Diversification Opportunities for PPG Industries and Sherwin Williams
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPG and Sherwin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Sherwin Williams Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherwin Williams 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 Sherwin Williams. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherwin Williams has no effect on the direction of PPG Industries i.e., PPG Industries and Sherwin Williams go up and down completely randomly.
Pair Corralation between PPG Industries and Sherwin Williams
Considering the 90-day investment horizon PPG Industries is expected to under-perform the Sherwin Williams. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 1.17 times less risky than Sherwin Williams. The stock trades about -0.04 of its potential returns per unit of risk. The Sherwin Williams Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 29,856 in Sherwin Williams Co on October 20, 2024 and sell it today you would earn a total of 5,542 from holding Sherwin Williams Co or generate 18.56% 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. Sherwin Williams Co
Performance |
| Timeline |
| PPG Industries |
| Sherwin Williams |
PPG Industries and Sherwin Williams Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Sherwin Williams
The main advantage of trading using opposite PPG Industries and Sherwin Williams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Sherwin Williams 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 Sherwin Williams will offset losses from the drop in Sherwin Williams' 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 |
| Sherwin Williams vs. Air Products and | Sherwin Williams vs. Linde plc Ordinary | Sherwin Williams vs. Ecolab Inc | Sherwin Williams vs. RPM International |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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