Correlation Between Fertilizantes Heringer and Avery Dennison

Can any of the company-specific risk be diversified away by investing in both Fertilizantes Heringer 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 Fertilizantes Heringer and Avery Dennison into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fertilizantes Heringer SA and Avery Dennison, you can compare the effects of market volatilities on Fertilizantes Heringer 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 Fertilizantes Heringer with a short position of Avery Dennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fertilizantes Heringer and Avery Dennison.

Diversification Opportunities for Fertilizantes Heringer and Avery Dennison

0.92

Correlation Coefficient

Fertilizantes Heringer  Avery Dennison

Almost no diversification

The 3 months correlation between Fertilizantes and Avery is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fertilizantes Heringer SA and Avery Dennison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avery Dennison and Fertilizantes Heringer 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 Fertilizantes Heringer SA 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 has no effect on the direction of Fertilizantes Heringer i.e., Fertilizantes Heringer and Avery Dennison go up and down completely randomly.

Pair Corralation between Fertilizantes Heringer and Avery Dennison

Assuming the 90 days trading horizon Fertilizantes Heringer is expected to generate 1.18 times less return on investment than Avery Dennison. In addition to that, Fertilizantes Heringer is 8.22 times more volatile than Avery Dennison. It trades about 0.01 of its total potential returns per unit of risk. Avery Dennison is currently generating about 0.09 per unit of volatility. If you would invest  48,417  in Avery Dennison on October 5, 2024 and sell it today you would earn a total of  9,525  from holding Avery Dennison or generate 19.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.2%
Values	Daily Returns

Fertilizantes Heringer SA  vs.  Avery Dennison

Fertilizantes Heringer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizantes Heringer SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fertilizantes Heringer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Avery Dennison

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avery Dennison are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Avery Dennison is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fertilizantes Heringer and Avery Dennison

The main advantage of trading using opposite Fertilizantes Heringer and Avery Dennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fertilizantes Heringer 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.

The idea behind Fertilizantes Heringer SA and Avery Dennison 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 Global Correlations module to find global opportunities by holding instruments from different markets.