Correlation Between PPLA Participations and Howmet Aerospace

Can any of the company-specific risk be diversified away by investing in both PPLA Participations and Howmet Aerospace 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 PPLA Participations and Howmet Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PPLA Participations and Howmet Aerospace, you can compare the effects of market volatilities on PPLA Participations and Howmet Aerospace 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 PPLA Participations with a short position of Howmet Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPLA Participations and Howmet Aerospace.

Diversification Opportunities for PPLA Participations and Howmet Aerospace

-0.36

Correlation Coefficient

PPLA Participations  Howmet Aerospace

Very good diversification

The 3 months correlation between PPLA and Howmet is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PPLA Participations and Howmet Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howmet Aerospace and PPLA Participations 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 PPLA Participations are associated (or correlated) with Howmet Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howmet Aerospace has no effect on the direction of PPLA Participations i.e., PPLA Participations and Howmet Aerospace go up and down completely randomly.

Pair Corralation between PPLA Participations and Howmet Aerospace

Assuming the 90 days trading horizon PPLA Participations is expected to under-perform the Howmet Aerospace. In addition to that, PPLA Participations is 2.83 times more volatile than Howmet Aerospace. It trades about -0.03 of its total potential returns per unit of risk. Howmet Aerospace is currently generating about 0.23 per unit of volatility. If you would invest  76,148  in Howmet Aerospace on April 24, 2025 and sell it today you would earn a total of  26,978  from holding Howmet Aerospace or generate 35.43% return on investment over 90 days.

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

PPLA Participations  vs.  Howmet Aerospace

PPLA Participations

Risk-Adjusted Performance

Very Weak

Over the last 90 days PPLA Participations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's essential indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Howmet Aerospace

Risk-Adjusted Performance

Solid

Over the last 90 days Howmet Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Howmet Aerospace sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PPLA Participations and Howmet Aerospace

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

The idea behind PPLA Participations and Howmet Aerospace 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.