Correlation Between Millennium Group and Avery Dennison

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

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

Diversification Opportunities for Millennium Group and Avery Dennison

0.16

Correlation Coefficient

Millennium Group  Avery Dennison

Average diversification

The 3 months correlation between Millennium and Avery is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Millennium Group International and Avery Dennison Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avery Dennison Corp and Millennium Group 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 Millennium Group International 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 Corp has no effect on the direction of Millennium Group i.e., Millennium Group and Avery Dennison go up and down completely randomly.

Pair Corralation between Millennium Group and Avery Dennison

Given the investment horizon of 90 days Millennium Group International is expected to generate 4.21 times more return on investment than Avery Dennison. However, Millennium Group is 4.21 times more volatile than Avery Dennison Corp. It trades about 0.01 of its potential returns per unit of risk. Avery Dennison Corp is currently generating about -0.09 per unit of risk. If you would invest  148.00  in Millennium Group International on January 29, 2024 and sell it today you would lose (1.00) from holding Millennium Group International or give up 0.68% of portfolio value over 90 days.

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

Millennium Group International  vs.  Avery Dennison Corp

Millennium Group Int

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Millennium Group International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Millennium Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Avery Dennison Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avery Dennison Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Avery Dennison may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Millennium Group and Avery Dennison

The main advantage of trading using opposite Millennium Group and Avery Dennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Millennium Group 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 Millennium Group International and Avery Dennison Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.