Correlation Between Lifeway Foods and Avery Dennison
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods 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 Lifeway Foods and Avery Dennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Avery Dennison Corp, you can compare the effects of market volatilities on Lifeway Foods 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 Lifeway Foods with a short position of Avery Dennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Avery Dennison.
Diversification Opportunities for Lifeway Foods and Avery Dennison
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifeway and Avery is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Avery Dennison Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avery Dennison Corp and Lifeway Foods 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 Lifeway Foods 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 Corp has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Avery Dennison go up and down completely randomly.
Pair Corralation between Lifeway Foods and Avery Dennison
Assuming the 90 days horizon Lifeway Foods is expected to generate 3.9 times more return on investment than Avery Dennison. However, Lifeway Foods is 3.9 times more volatile than Avery Dennison Corp. It trades about 0.08 of its potential returns per unit of risk. Avery Dennison Corp is currently generating about 0.01 per unit of risk. If you would invest 550.00 in Lifeway Foods on October 7, 2024 and sell it today you would earn a total of 1,850 from holding Lifeway Foods or generate 336.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Avery Dennison Corp
Performance |
| Timeline |
| Lifeway Foods |
| Avery Dennison Corp |
Lifeway Foods and Avery Dennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Avery Dennison
The main advantage of trading using opposite Lifeway Foods and Avery Dennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods 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.| Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. NMI Holdings | Lifeway Foods vs. SIVERS SEMICONDUCTORS AB | Lifeway Foods vs. Talanx AG |
| Avery Dennison vs. CHINA SOUTHN AIR H | Avery Dennison vs. NORWEGIAN AIR SHUT | Avery Dennison vs. Corsair Gaming | Avery Dennison vs. Alaska Air Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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