Correlation Between Avery Dennison and Millennium Group

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

Diversification Opportunities for Avery Dennison and Millennium Group

0.76

Correlation Coefficient

Avery Dennison  Millennium Group

Poor diversification

The 3 months correlation between Avery and Millennium is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Avery Dennison Corp and Millennium Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Group Int 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 Millennium Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Group Int has no effect on the direction of Avery Dennison i.e., Avery Dennison and Millennium Group go up and down completely randomly.

Pair Corralation between Avery Dennison and Millennium Group

Considering the 90-day investment horizon Avery Dennison Corp is expected to under-perform the Millennium Group. But the stock apears to be less risky and, when comparing its historical volatility, Avery Dennison Corp is 2.98 times less risky than Millennium Group. The stock trades about -0.12 of its potential returns per unit of risk. The Millennium Group International is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  164.00  in Millennium Group International on September 21, 2024 and sell it today you would lose (19.00) from holding Millennium Group International or give up 11.59% 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.  Millennium Group International

Avery Dennison Corp

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Millennium Group Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Millennium Group International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Avery Dennison and Millennium Group

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

The idea behind Avery Dennison Corp and Millennium Group International 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.