Correlation Between China Tontine and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both China Tontine 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 China Tontine and Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Tontine Wines and Constellation Brands Class, you can compare the effects of market volatilities on China Tontine 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 China Tontine with a short position of Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Tontine and Constellation Brands.
Diversification Opportunities for China Tontine and Constellation Brands
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Constellation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tontine Wines and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands and China Tontine 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 China Tontine Wines 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 China Tontine i.e., China Tontine and Constellation Brands go up and down completely randomly.
Pair Corralation between China Tontine and Constellation Brands
Assuming the 90 days horizon China Tontine Wines is expected to generate 53.04 times more return on investment than Constellation Brands. However, China Tontine is 53.04 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 0.30 in China Tontine Wines on August 25, 2024 and sell it today you would earn a total of 6.80 from holding China Tontine Wines or generate 2266.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
China Tontine Wines vs. Constellation Brands Class
Performance |
| Timeline |
| China Tontine Wines |
| Constellation Brands |
China Tontine and Constellation Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Tontine and Constellation Brands
The main advantage of trading using opposite China Tontine and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Tontine 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.| China Tontine vs. Diageo PLC ADR | China Tontine vs. Constellation Brands Class | China Tontine vs. Morningstar Unconstrained Allocation | China Tontine vs. SEI Investments |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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