Correlation Between PPG Industries and Minerals Technologies

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

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

Diversification Opportunities for PPG Industries and Minerals Technologies

-0.29

Correlation Coefficient

PPG Industries  Minerals Technologies

Very good diversification

The 3 months correlation between PPG and Minerals is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of PPG Industries i.e., PPG Industries and Minerals Technologies go up and down completely randomly.

Pair Corralation between PPG Industries and Minerals Technologies

Considering the 90-day investment horizon PPG Industries is expected to under-perform the Minerals Technologies. But the stock apears to be less risky and, when comparing its historical volatility, PPG Industries is 1.16 times less risky than Minerals Technologies. The stock trades about -0.11 of its potential returns per unit of risk. The Minerals Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  7,236  in Minerals Technologies on February 29, 2024 and sell it today you would earn a total of  1,201  from holding Minerals Technologies or generate 16.6% return on investment over 90 days.

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

PPG Industries  vs.  Minerals Technologies

PPG Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PPG Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Minerals Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Minerals Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Minerals Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PPG Industries and Minerals Technologies

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

The idea behind PPG Industries and Minerals Technologies 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.