Correlation Between TriMas and Avery Dennison

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

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

Diversification Opportunities for TriMas and Avery Dennison

0.15

Correlation Coefficient

TriMas  Avery Dennison

Average diversification

The 3 months correlation between TriMas and Avery is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding TriMas 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 TriMas 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 TriMas 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 TriMas i.e., TriMas and Avery Dennison go up and down completely randomly.

Pair Corralation between TriMas and Avery Dennison

Considering the 90-day investment horizon TriMas is expected to generate 1.42 times more return on investment than Avery Dennison. However, TriMas is 1.42 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  2,530  in TriMas on September 28, 2024 and sell it today you would lose (71.00) from holding TriMas or give up 2.81% of portfolio value over 90 days.

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

TriMas  vs.  Avery Dennison Corp

TriMas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TriMas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TriMas is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with TriMas and Avery Dennison

The main advantage of trading using opposite TriMas and Avery Dennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TriMas 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 TriMas 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.