Correlation Between Avery Dennison and SAG Holdings
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and SAG 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 SAG 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 SAG Holdings Limited, you can compare the effects of market volatilities on Avery Dennison and SAG 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 SAG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and SAG Holdings.
Diversification Opportunities for Avery Dennison and SAG Holdings
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avery and SAG is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and SAG Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAG Holdings Limited 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 SAG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAG Holdings Limited has no effect on the direction of Avery Dennison i.e., Avery Dennison and SAG Holdings go up and down completely randomly.
Pair Corralation between Avery Dennison and SAG Holdings
Considering the 90-day investment horizon Avery Dennison Corp is expected to generate 0.13 times more return on investment than SAG Holdings. However, Avery Dennison Corp is 7.64 times less risky than SAG Holdings. It trades about 0.03 of its potential returns per unit of risk. SAG Holdings Limited is currently generating about -0.36 per unit of risk. If you would invest 20,703 in Avery Dennison Corp on August 27, 2024 and sell it today you would earn a total of 91.00 from holding Avery Dennison Corp or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avery Dennison Corp vs. SAG Holdings Limited
Performance |
| Timeline |
| Avery Dennison Corp |
| SAG Holdings Limited |
Avery Dennison and SAG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avery Dennison and SAG Holdings
The main advantage of trading using opposite Avery Dennison and SAG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, SAG 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 SAG Holdings will offset losses from the drop in SAG 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 |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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