Correlation Between Avery Dennison and Stepstone
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and Stepstone 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 Stepstone 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 Stepstone Group, you can compare the effects of market volatilities on Avery Dennison and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and Stepstone.
Diversification Opportunities for Avery Dennison and Stepstone
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Avery and Stepstone is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Avery Dennison i.e., Avery Dennison and Stepstone go up and down completely randomly.
Pair Corralation between Avery Dennison and Stepstone
Considering the 90-day investment horizon Avery Dennison Corp is expected to under-perform the Stepstone. But the stock apears to be less risky and, when comparing its historical volatility, Avery Dennison Corp is 1.71 times less risky than Stepstone. The stock trades about -0.05 of its potential returns per unit of risk. The Stepstone Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,443 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 2,146 from holding Stepstone Group or generate 48.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avery Dennison Corp vs. Stepstone Group
Performance |
| Timeline |
| Avery Dennison Corp |
| Stepstone Group |
Avery Dennison and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avery Dennison and Stepstone
The main advantage of trading using opposite Avery Dennison and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone'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 |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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