Correlation Between Constellation Brands and Air Lease
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Air Lease 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 Constellation Brands and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Brands Class and Air Lease, you can compare the effects of market volatilities on Constellation Brands and Air Lease 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 Constellation Brands with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Air Lease.
Diversification Opportunities for Constellation Brands and Air Lease
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Constellation and Air is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Constellation Brands 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 Constellation Brands Class are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Constellation Brands i.e., Constellation Brands and Air Lease go up and down completely randomly.
Pair Corralation between Constellation Brands and Air Lease
Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.76 times more return on investment than Air Lease. However, Constellation Brands Class is 1.31 times less risky than Air Lease. It trades about 0.23 of its potential returns per unit of risk. Air Lease is currently generating about 0.0 per unit of risk. If you would invest 16,996 in Constellation Brands Class on December 8, 2024 and sell it today you would earn a total of 1,629 from holding Constellation Brands Class or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Air Lease
Performance |
| Timeline |
| Constellation Brands |
| Air Lease |
Constellation Brands and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Air Lease
The main advantage of trading using opposite Constellation Brands and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman | Constellation Brands vs. Diageo PLC ADR |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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