Correlation Between Avery Dennison and Ardagh Metal
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and Ardagh Metal 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 Ardagh Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avery Dennison Corp and Ardagh Metal Packaging, you can compare the effects of market volatilities on Avery Dennison and Ardagh Metal 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 Ardagh Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and Ardagh Metal.
Diversification Opportunities for Avery Dennison and Ardagh Metal
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avery and Ardagh is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Ardagh Metal Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Metal Packaging 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 Corp are associated (or correlated) with Ardagh Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Metal Packaging has no effect on the direction of Avery Dennison i.e., Avery Dennison and Ardagh Metal go up and down completely randomly.
Pair Corralation between Avery Dennison and Ardagh Metal
Considering the 90-day investment horizon Avery Dennison Corp is expected to generate 0.38 times more return on investment than Ardagh Metal. However, Avery Dennison Corp is 2.65 times less risky than Ardagh Metal. It trades about -0.16 of its potential returns per unit of risk. Ardagh Metal Packaging is currently generating about -0.24 per unit of risk. If you would invest 20,765 in Avery Dennison Corp on August 24, 2024 and sell it today you would lose (587.50) from holding Avery Dennison Corp or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avery Dennison Corp vs. Ardagh Metal Packaging
Performance |
| Timeline |
| Avery Dennison Corp |
| Ardagh Metal Packaging |
Avery Dennison and Ardagh Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avery Dennison and Ardagh Metal
The main advantage of trading using opposite Avery Dennison and Ardagh Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, Ardagh Metal 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 Ardagh Metal will offset losses from the drop in Ardagh Metal's long position.| Avery Dennison vs. Packaging Corp of | Avery Dennison vs. O I Glass | Avery Dennison vs. Silgan Holdings | Avery Dennison vs. Sealed Air |
| Ardagh Metal vs. Crown Holdings | Ardagh Metal vs. Amcor PLC | Ardagh Metal vs. Avery Dennison Corp | Ardagh Metal vs. Packaging Corp of |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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