Correlation Between Metalurgica Gerdau and Avery Dennison
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Avery Dennison 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 Metalurgica Gerdau and Avery Dennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metalurgica Gerdau SA and Avery Dennison, you can compare the effects of market volatilities on Metalurgica Gerdau and Avery Dennison 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 Metalurgica Gerdau with a short position of Avery Dennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Avery Dennison.
Diversification Opportunities for Metalurgica Gerdau and Avery Dennison
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metalurgica and Avery is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Avery Dennison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avery Dennison and Metalurgica Gerdau 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 Metalurgica Gerdau SA are associated (or correlated) with Avery Dennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avery Dennison has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Avery Dennison go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Avery Dennison
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to under-perform the Avery Dennison. In addition to that, Metalurgica Gerdau is 38.51 times more volatile than Avery Dennison. It trades about -0.19 of its total potential returns per unit of risk. Avery Dennison is currently generating about 0.16 per unit of volatility. If you would invest 57,767 in Avery Dennison on October 30, 2024 and sell it today you would earn a total of 175.00 from holding Avery Dennison or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Avery Dennison
Performance |
| Timeline |
| Metalurgica Gerdau |
| Avery Dennison |
Metalurgica Gerdau and Avery Dennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Avery Dennison
The main advantage of trading using opposite Metalurgica Gerdau and Avery Dennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Avery Dennison 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 Avery Dennison will offset losses from the drop in Avery Dennison's long position.| Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
| Avery Dennison vs. Bread Financial Holdings | Avery Dennison vs. Chevron | Avery Dennison vs. Datadog, | Avery Dennison vs. JB Hunt Transport |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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