Correlation Between MAHLE Metal and Avery Dennison
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal 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 MAHLE Metal and Avery Dennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and Avery Dennison, you can compare the effects of market volatilities on MAHLE Metal 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 MAHLE Metal with a short position of Avery Dennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Avery Dennison.
Diversification Opportunities for MAHLE Metal and Avery Dennison
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MAHLE and Avery is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Avery Dennison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avery Dennison and MAHLE Metal 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 MAHLE Metal Leve 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 MAHLE Metal i.e., MAHLE Metal and Avery Dennison go up and down completely randomly.
Pair Corralation between MAHLE Metal and Avery Dennison
Assuming the 90 days trading horizon MAHLE Metal Leve is expected to generate 33.86 times more return on investment than Avery Dennison. However, MAHLE Metal is 33.86 times more volatile than Avery Dennison. It trades about 0.07 of its potential returns per unit of risk. Avery Dennison is currently generating about 0.16 per unit of risk. If you would invest 2,694 in MAHLE Metal Leve on October 30, 2024 and sell it today you would earn a total of 99.00 from holding MAHLE Metal Leve or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Avery Dennison
Performance |
| Timeline |
| MAHLE Metal Leve |
| Avery Dennison |
MAHLE Metal and Avery Dennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Avery Dennison
The main advantage of trading using opposite MAHLE Metal and Avery Dennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal 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.| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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