Correlation Between Avery Dennison and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and Sealed Air 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 Sealed Air 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 Sealed Air, you can compare the effects of market volatilities on Avery Dennison and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and Sealed Air.
Diversification Opportunities for Avery Dennison and Sealed Air
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Avery and Sealed is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Avery Dennison i.e., Avery Dennison and Sealed Air go up and down completely randomly.
Pair Corralation between Avery Dennison and Sealed Air
Considering the 90-day investment horizon Avery Dennison Corp is expected to generate 0.5 times more return on investment than Sealed Air. However, Avery Dennison Corp is 2.01 times less risky than Sealed Air. It trades about -0.1 of its potential returns per unit of risk. Sealed Air is currently generating about -0.13 per unit of risk. If you would invest 17,864 in Avery Dennison Corp on January 13, 2025 and sell it today you would lose (896.00) from holding Avery Dennison Corp or give up 5.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avery Dennison Corp vs. Sealed Air
Performance |
| Timeline |
| Avery Dennison Corp |
| Sealed Air |
Avery Dennison and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avery Dennison and Sealed Air
The main advantage of trading using opposite Avery Dennison and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air'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 |
| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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