Correlation Between Ross Stores and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Ross Stores and PPG Industries 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 Ross Stores and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and PPG Industries, you can compare the effects of market volatilities on Ross Stores and PPG Industries 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 Ross Stores with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and PPG Industries.
Diversification Opportunities for Ross Stores and PPG Industries
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ross and PPG is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Ross Stores 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 Ross Stores are associated (or correlated) with PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Ross Stores i.e., Ross Stores and PPG Industries go up and down completely randomly.
Pair Corralation between Ross Stores and PPG Industries
Assuming the 90 days trading horizon Ross Stores is expected to generate 1.04 times more return on investment than PPG Industries. However, Ross Stores is 1.04 times more volatile than PPG Industries. It trades about 0.05 of its potential returns per unit of risk. PPG Industries is currently generating about 0.0 per unit of risk. If you would invest 10,816 in Ross Stores on August 30, 2024 and sell it today you would earn a total of 3,826 from holding Ross Stores or generate 35.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. PPG Industries
Performance |
| Timeline |
| Ross Stores |
| PPG Industries |
Ross Stores and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and PPG Industries
The main advantage of trading using opposite Ross Stores and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' long position.| Ross Stores vs. Apple Inc | Ross Stores vs. Apple Inc | Ross Stores vs. Superior Plus Corp | Ross Stores vs. SIVERS SEMICONDUCTORS AB |
| PPG Industries vs. Daito Trust Construction | PPG Industries vs. HYDROFARM HLD GRP | PPG Industries vs. AGRICULTBK HADR25 YC | PPG Industries vs. Ross Stores |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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