Correlation Between PPG Industries and H B

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

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

Diversification Opportunities for PPG Industries and H B

0.8

Correlation Coefficient

PPG Industries  H B

Very poor diversification

The 3 months correlation between PPG and FUL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller 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 H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of PPG Industries i.e., PPG Industries and H B go up and down completely randomly.

Pair Corralation between PPG Industries and H B

Considering the 90-day investment horizon PPG Industries is expected to generate 0.83 times more return on investment than H B. However, PPG Industries is 1.21 times less risky than H B. It trades about -0.01 of its potential returns per unit of risk. H B Fuller is currently generating about -0.01 per unit of risk. If you would invest  12,045  in PPG Industries on December 4, 2024 and sell it today you would lose (1,038) from holding PPG Industries or give up 8.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

PPG Industries  vs.  H B Fuller

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. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

H B Fuller

Risk-Adjusted Performance

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PPG Industries and H B

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

The idea behind PPG Industries and H B Fuller 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.