Correlation Between Avery Dennison and Berry Global

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

Diversification Opportunities for Avery Dennison and Berry Global

-0.37

Correlation Coefficient

Avery Dennison  Berry Global

Very good diversification

The 3 months correlation between Avery and Berry is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Berry Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berry Global Group 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 Berry Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berry Global Group has no effect on the direction of Avery Dennison i.e., Avery Dennison and Berry Global go up and down completely randomly.

Pair Corralation between Avery Dennison and Berry Global

Considering the 90-day investment horizon Avery Dennison Corp is expected to under-perform the Berry Global. In addition to that, Avery Dennison is 1.04 times more volatile than Berry Global Group. It trades about -0.06 of its total potential returns per unit of risk. Berry Global Group is currently generating about 0.09 per unit of volatility. If you would invest  6,474  in Berry Global Group on December 27, 2024 and sell it today you would earn a total of  447.00  from holding Berry Global Group or generate 6.9% return on investment over 90 days.

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

Avery Dennison Corp  vs.  Berry Global Group

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.

Berry Global Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berry Global Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Berry Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Avery Dennison and Berry Global

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

The idea behind Avery Dennison Corp and Berry Global Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.