Correlation Between Alliant Energy and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both Alliant Energy 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 Alliant Energy and Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliant Energy Corp and Constellation Brands Class, you can compare the effects of market volatilities on Alliant Energy 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 Alliant Energy with a short position of Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliant Energy and Constellation Brands.
Diversification Opportunities for Alliant Energy and Constellation Brands
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alliant and Constellation is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands and Alliant Energy 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 Alliant Energy Corp 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 Alliant Energy i.e., Alliant Energy and Constellation Brands go up and down completely randomly.
Pair Corralation between Alliant Energy and Constellation Brands
Considering the 90-day investment horizon Alliant Energy Corp is expected to generate 0.96 times more return on investment than Constellation Brands. However, Alliant Energy Corp is 1.04 times less risky than Constellation Brands. It trades about 0.04 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 5,154 in Alliant Energy Corp on August 30, 2024 and sell it today you would earn a total of 1,205 from holding Alliant Energy Corp or generate 23.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliant Energy Corp vs. Constellation Brands Class
Performance |
| Timeline |
| Alliant Energy Corp |
| Constellation Brands |
Alliant Energy and Constellation Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliant Energy and Constellation Brands
The main advantage of trading using opposite Alliant Energy and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy 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.| Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. Pinnacle West Capital |
| Constellation Brands vs. Andrew Peller Limited | Constellation Brands vs. Naked Wines plc | Constellation Brands vs. Willamette Valley Vineyards | Constellation Brands vs. The Tinley Beverage |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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