Correlation Between PPG Industries and IShares Trust

Can any of the company-specific risk be diversified away by investing in both PPG Industries and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PPG Industries and iShares Trust , you can compare the effects of market volatilities on PPG Industries and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and IShares Trust.

Diversification Opportunities for PPG Industries and IShares Trust

-0.46

Correlation Coefficient

PPG Industries  IShares Trust

Very good diversification

The 3 months correlation between PPG and IShares is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of PPG Industries i.e., PPG Industries and IShares Trust go up and down completely randomly.

Pair Corralation between PPG Industries and IShares Trust

Assuming the 90 days trading horizon PPG Industries is expected to under-perform the IShares Trust. In addition to that, PPG Industries is 1.14 times more volatile than iShares Trust . It trades about -0.07 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.05 per unit of volatility. If you would invest  177,668  in iShares Trust on December 19, 2024 and sell it today you would earn a total of  3,607  from holding iShares Trust or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	70.0%
Values	Daily Returns

PPG Industries  vs.  iShares Trust

PPG Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days PPG Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, PPG Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, IShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PPG Industries and IShares Trust

The main advantage of trading using opposite PPG Industries and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.

The idea behind PPG Industries and iShares Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.