Correlation Between Trinseo SA and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Trinseo SA 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 Trinseo SA and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trinseo SA and PPG Industries, you can compare the effects of market volatilities on Trinseo SA 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 Trinseo SA with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trinseo SA and PPG Industries.
Diversification Opportunities for Trinseo SA and PPG Industries
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Trinseo and PPG is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Trinseo SA and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Trinseo SA 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 Trinseo SA 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 Trinseo SA i.e., Trinseo SA and PPG Industries go up and down completely randomly.
Pair Corralation between Trinseo SA and PPG Industries
Considering the 90-day investment horizon Trinseo SA is expected to generate 5.12 times more return on investment than PPG Industries. However, Trinseo SA is 5.12 times more volatile than PPG Industries. It trades about 0.08 of its potential returns per unit of risk. PPG Industries is currently generating about -0.1 per unit of risk. If you would invest 402.00 in Trinseo SA on December 2, 2024 and sell it today you would earn a total of 90.00 from holding Trinseo SA or generate 22.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Trinseo SA vs. PPG Industries
Performance |
Timeline |
Trinseo SA |
PPG Industries |
Trinseo SA and PPG Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Trinseo SA and PPG Industries
The main advantage of trading using opposite Trinseo SA and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trinseo SA 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.Trinseo SA vs. Perimeter Solutions SA | Trinseo SA vs. Kronos Worldwide | Trinseo SA vs. Sensient Technologies | Trinseo SA vs. Element Solutions |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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