Correlation Between PPG Industries and Ecolab
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Ecolab 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 Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Ecolab Inc, you can compare the effects of market volatilities on PPG Industries and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Ecolab.
Diversification Opportunities for PPG Industries and Ecolab
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPG and Ecolab is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of PPG Industries i.e., PPG Industries and Ecolab go up and down completely randomly.
Pair Corralation between PPG Industries and Ecolab
Assuming the 90 days horizon PPG Industries is expected to under-perform the Ecolab. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 1.19 times less risky than Ecolab. The stock trades about -0.01 of its potential returns per unit of risk. The Ecolab Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 23,310 in Ecolab Inc on August 29, 2024 and sell it today you would earn a total of 190.00 from holding Ecolab Inc or generate 0.82% 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. Ecolab Inc
Performance |
| Timeline |
| PPG Industries |
| Ecolab Inc |
PPG Industries and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Ecolab
The main advantage of trading using opposite PPG Industries and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| PPG Industries vs. Daito Trust Construction | PPG Industries vs. HYDROFARM HLD GRP | PPG Industries vs. AGRICULTBK HADR25 YC | PPG Industries vs. Ross Stores |
| Ecolab vs. Linde plc | Ecolab vs. Superior Plus Corp | Ecolab vs. NMI Holdings | Ecolab vs. SIVERS SEMICONDUCTORS AB |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |