Correlation Between Avery Dennison and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and Zoom Video 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 Avery Dennison and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avery Dennison and Zoom Video Communications, you can compare the effects of market volatilities on Avery Dennison and Zoom Video 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 Avery Dennison with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and Zoom Video.
Diversification Opportunities for Avery Dennison and Zoom Video
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avery and Zoom is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications and Avery Dennison 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 Avery Dennison are associated (or correlated) with Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of Avery Dennison i.e., Avery Dennison and Zoom Video go up and down completely randomly.
Pair Corralation between Avery Dennison and Zoom Video
Assuming the 90 days trading horizon Avery Dennison is expected to generate 2.32 times less return on investment than Zoom Video. But when comparing it to its historical volatility, Avery Dennison is 2.67 times less risky than Zoom Video. It trades about 0.04 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,396 in Zoom Video Communications on October 16, 2024 and sell it today you would earn a total of 524.00 from holding Zoom Video Communications or generate 37.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.59% |
| Values | Daily Returns |
Avery Dennison vs. Zoom Video Communications
Performance |
| Timeline |
| Avery Dennison |
| Zoom Video Communications |
Avery Dennison and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avery Dennison and Zoom Video
The main advantage of trading using opposite Avery Dennison and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, Zoom Video 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 Zoom Video will offset losses from the drop in Zoom Video's long position.| Avery Dennison vs. Zoom Video Communications | Avery Dennison vs. MAHLE Metal Leve | Avery Dennison vs. Ross Stores | Avery Dennison vs. Metalurgica Gerdau SA |
| Zoom Video vs. Applied Materials, | Zoom Video vs. Multilaser Industrial SA | Zoom Video vs. Guidewire Software, | Zoom Video vs. Martin Marietta Materials, |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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