Correlation Between Avery Dennison and Ball

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

Diversification Opportunities for Avery Dennison and Ball

0.65

Correlation Coefficient

Avery Dennison  Ball

Poor diversification

The 3 months correlation between Avery and Ball is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Ball Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ball 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 Ball. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ball has no effect on the direction of Avery Dennison i.e., Avery Dennison and Ball go up and down completely randomly.

Pair Corralation between Avery Dennison and Ball

Considering the 90-day investment horizon Avery Dennison Corp is expected to generate 0.83 times more return on investment than Ball. However, Avery Dennison Corp is 1.21 times less risky than Ball. It trades about -0.06 of its potential returns per unit of risk. Ball Corporation is currently generating about -0.07 per unit of risk. If you would invest  18,760  in Avery Dennison Corp on December 27, 2024 and sell it today you would lose (966.00) from holding Avery Dennison Corp or give up 5.15% of portfolio value over 90 days.

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

Avery Dennison Corp  vs.  Ball Corp.

Avery Dennison Corp

Risk-Adjusted Performance

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.

Ball

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ball Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Avery Dennison and Ball

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

The idea behind Avery Dennison Corp and Ball Corporation 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.