Correlation Between Air Lease and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both Air Lease and Constellation Brands 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 Air Lease and Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Constellation Brands Class, you can compare the effects of market volatilities on Air Lease and Constellation Brands 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 Air Lease with a short position of Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Constellation Brands.
Diversification Opportunities for Air Lease and Constellation Brands
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Constellation is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands and Air Lease 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 Air Lease are associated (or correlated) with Constellation Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Brands has no effect on the direction of Air Lease i.e., Air Lease and Constellation Brands go up and down completely randomly.
Pair Corralation between Air Lease and Constellation Brands
Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.19 times more return on investment than Constellation Brands. However, Air Lease is 1.19 times more volatile than Constellation Brands Class. It trades about -0.03 of its potential returns per unit of risk. Constellation Brands Class is currently generating about -0.19 per unit of risk. If you would invest 4,802 in Air Lease on September 20, 2024 and sell it today you would lose (56.00) from holding Air Lease or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Constellation Brands Class
Performance |
| Timeline |
| Air Lease |
| Constellation Brands |
Air Lease and Constellation Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Constellation Brands
The main advantage of trading using opposite Air Lease and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Constellation Brands 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 Constellation Brands will offset losses from the drop in Constellation Brands' long position.| Air Lease vs. McGrath RentCorp | Air Lease vs. Custom Truck One | Air Lease vs. Alta Equipment Group | Air Lease vs. PROG Holdings |
| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
Check out your portfolio center.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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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