Correlation Between Avery Dennison and Vanguard Sumer

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Avery Dennison and Vanguard Sumer 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 Vanguard Sumer 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 Vanguard Sumer Discretionary, you can compare the effects of market volatilities on Avery Dennison and Vanguard Sumer 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 Vanguard Sumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and Vanguard Sumer.

Diversification Opportunities for Avery Dennison and Vanguard Sumer

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Avery and Vanguard is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Vanguard Sumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Sumer Discr 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 Vanguard Sumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Sumer Discr has no effect on the direction of Avery Dennison i.e., Avery Dennison and Vanguard Sumer go up and down completely randomly.

Pair Corralation between Avery Dennison and Vanguard Sumer

Considering the 90-day investment horizon Avery Dennison is expected to generate 17.89 times less return on investment than Vanguard Sumer. But when comparing it to its historical volatility, Avery Dennison Corp is 1.28 times less risky than Vanguard Sumer. It trades about 0.03 of its potential returns per unit of risk. Vanguard Sumer Discretionary is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  17,617  in Vanguard Sumer Discretionary on August 28, 2024 and sell it today you would earn a total of  1,730  from holding Vanguard Sumer Discretionary or generate 9.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Avery Dennison Corp  vs.  Vanguard Sumer Discretionary

 Performance 
       Timeline  
Avery Dennison Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Avery Dennison Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Avery Dennison is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Vanguard Sumer Discr 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Sumer Discretionary are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Sumer showed solid returns over the last few months and may actually be approaching a breakup point.

Avery Dennison and Vanguard Sumer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avery Dennison and Vanguard Sumer

The main advantage of trading using opposite Avery Dennison and Vanguard Sumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, Vanguard Sumer 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 Vanguard Sumer will offset losses from the drop in Vanguard Sumer's long position.
The idea behind Avery Dennison Corp and Vanguard Sumer Discretionary pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

Other Complementary Tools

Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope