Correlation Between Avery Dennison and NEXE Innovations
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and NEXE Innovations 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 NEXE Innovations 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 NEXE Innovations, you can compare the effects of market volatilities on Avery Dennison and NEXE Innovations 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 NEXE Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and NEXE Innovations.
Diversification Opportunities for Avery Dennison and NEXE Innovations
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Avery and NEXE is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and NEXE Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXE Innovations 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 NEXE Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXE Innovations has no effect on the direction of Avery Dennison i.e., Avery Dennison and NEXE Innovations go up and down completely randomly.
Pair Corralation between Avery Dennison and NEXE Innovations
Considering the 90-day investment horizon Avery Dennison is expected to generate 3.41 times less return on investment than NEXE Innovations. But when comparing it to its historical volatility, Avery Dennison Corp is 5.22 times less risky than NEXE Innovations. It trades about 0.04 of its potential returns per unit of risk. NEXE Innovations is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 29.00 in NEXE Innovations on September 12, 2024 and sell it today you would lose (1.00) from holding NEXE Innovations or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Avery Dennison Corp vs. NEXE Innovations
Performance |
| Timeline |
| Avery Dennison Corp |
| NEXE Innovations |
Avery Dennison and NEXE Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avery Dennison and NEXE Innovations
The main advantage of trading using opposite Avery Dennison and NEXE Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, NEXE Innovations 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 NEXE Innovations will offset losses from the drop in NEXE Innovations' long position.| Avery Dennison vs. Packaging Corp of | Avery Dennison vs. O I Glass | Avery Dennison vs. Silgan Holdings | Avery Dennison vs. Sealed Air |
| NEXE Innovations vs. Ball Corporation | NEXE Innovations vs. Sealed Air | NEXE Innovations vs. International Paper | NEXE Innovations vs. Avery Dennison Corp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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