Correlation Between Avery Dennison and Consumer Discretionary
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and Consumer Discretionary 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 Consumer Discretionary 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 Consumer Discretionary Portfolio, you can compare the effects of market volatilities on Avery Dennison and Consumer Discretionary 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 Consumer Discretionary. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and Consumer Discretionary.
Diversification Opportunities for Avery Dennison and Consumer Discretionary
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avery and Consumer is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Consumer Discretionary Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Discretionary 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 Consumer Discretionary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Discretionary has no effect on the direction of Avery Dennison i.e., Avery Dennison and Consumer Discretionary go up and down completely randomly.
Pair Corralation between Avery Dennison and Consumer Discretionary
Considering the 90-day investment horizon Avery Dennison is expected to generate 1.36 times less return on investment than Consumer Discretionary. In addition to that, Avery Dennison is 1.02 times more volatile than Consumer Discretionary Portfolio. It trades about 0.06 of its total potential returns per unit of risk. Consumer Discretionary Portfolio is currently generating about 0.08 per unit of volatility. If you would invest 5,098 in Consumer Discretionary Portfolio on August 31, 2024 and sell it today you would earn a total of 1,970 from holding Consumer Discretionary Portfolio or generate 38.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Avery Dennison Corp vs. Consumer Discretionary Portfol
Performance |
| Timeline |
| Avery Dennison Corp |
| Consumer Discretionary |
Avery Dennison and Consumer Discretionary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avery Dennison and Consumer Discretionary
The main advantage of trading using opposite Avery Dennison and Consumer Discretionary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, Consumer Discretionary 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 Consumer Discretionary will offset losses from the drop in Consumer Discretionary's long position.| Avery Dennison vs. Stepstone Group | Avery Dennison vs. Reynolds Consumer Products | Avery Dennison vs. Broadstone Net Lease | Avery Dennison vs. Pmv Pharmaceuticals |
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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