Correlation Between Avery Dennison and Crown Holdings
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and Crown Holdings 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 Crown Holdings 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 Crown Holdings, you can compare the effects of market volatilities on Avery Dennison and Crown Holdings 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 Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and Crown Holdings.
Diversification Opportunities for Avery Dennison and Crown Holdings
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avery and Crown is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings 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 Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Avery Dennison i.e., Avery Dennison and Crown Holdings go up and down completely randomly.
Pair Corralation between Avery Dennison and Crown Holdings
Considering the 90-day investment horizon Avery Dennison is expected to generate 1.98 times less return on investment than Crown Holdings. But when comparing it to its historical volatility, Avery Dennison Corp is 1.31 times less risky than Crown Holdings. It trades about 0.14 of its potential returns per unit of risk. Crown Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 8,269 in Crown Holdings on November 1, 2024 and sell it today you would earn a total of 515.00 from holding Crown Holdings or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avery Dennison Corp vs. Crown Holdings
Performance |
| Timeline |
| Avery Dennison Corp |
| Crown Holdings |
Avery Dennison and Crown Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avery Dennison and Crown Holdings
The main advantage of trading using opposite Avery Dennison and Crown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, Crown Holdings 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 Crown Holdings will offset losses from the drop in Crown Holdings' long position.| Avery Dennison vs. Packaging Corp of | Avery Dennison vs. O I Glass | Avery Dennison vs. Silgan Holdings | Avery Dennison vs. Sealed Air |
| Crown Holdings vs. Amcor PLC | Crown Holdings vs. Avery Dennison Corp | Crown Holdings vs. Packaging Corp of | Crown Holdings vs. Sealed Air |
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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