Correlation Between Avery Dennison and O I

Can any of the company-specific risk be diversified away by investing in both Avery Dennison and O I 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 O I 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 O I Glass, you can compare the effects of market volatilities on Avery Dennison and O I 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 O I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avery Dennison and O I.

Diversification Opportunities for Avery Dennison and O I

0.13

Correlation Coefficient

Avery Dennison  O I

Average diversification

The 3 months correlation between Avery and O I is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and O I Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O I Glass 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 O I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O I Glass has no effect on the direction of Avery Dennison i.e., Avery Dennison and O I go up and down completely randomly.

Pair Corralation between Avery Dennison and O I

Considering the 90-day investment horizon Avery Dennison Corp is expected to generate 0.57 times more return on investment than O I. However, Avery Dennison Corp is 1.74 times less risky than O I. It trades about 0.05 of its potential returns per unit of risk. O I Glass is currently generating about 0.01 per unit of risk. If you would invest  16,288  in Avery Dennison Corp on February 7, 2024 and sell it today you would earn a total of  5,926  from holding Avery Dennison Corp or generate 36.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Avery Dennison Corp  vs.  O I Glass

Avery Dennison Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avery Dennison Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Avery Dennison may actually be approaching a critical reversion point that can send shares even higher in June 2024.

O I Glass

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days O I Glass has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Avery Dennison and O I

The main advantage of trading using opposite Avery Dennison and O I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avery Dennison position performs unexpectedly, O I 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 O I will offset losses from the drop in O I's long position.

The idea behind Avery Dennison Corp and O I Glass 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.