Correlation Between Axalta Coating and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both Axalta Coating 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 Axalta Coating and Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Constellation Brands Class, you can compare the effects of market volatilities on Axalta Coating 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 Axalta Coating with a short position of Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Constellation Brands.
Diversification Opportunities for Axalta Coating and Constellation Brands
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Axalta and Constellation is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands and Axalta Coating 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 Axalta Coating Systems 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 Axalta Coating i.e., Axalta Coating and Constellation Brands go up and down completely randomly.
Pair Corralation between Axalta Coating and Constellation Brands
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 1.18 times more return on investment than Constellation Brands. However, Axalta Coating is 1.18 times more volatile than Constellation Brands Class. It trades about 0.07 of its potential returns per unit of risk. Constellation Brands Class is currently generating about -0.01 per unit of risk. If you would invest 3,567 in Axalta Coating Systems on September 2, 2024 and sell it today you would earn a total of 479.00 from holding Axalta Coating Systems or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Constellation Brands Class
Performance |
| Timeline |
| Axalta Coating Systems |
| Constellation Brands |
Axalta Coating and Constellation Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Constellation Brands
The main advantage of trading using opposite Axalta Coating and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating 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.| Axalta Coating vs. Linde plc Ordinary | Axalta Coating vs. Air Products and | Axalta Coating vs. Aquagold International | Axalta Coating vs. Thrivent High Yield |
| 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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