Correlation Between Constellation Brands and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Harmony Gold 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 Harmony Gold 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 Harmony Gold Mining, you can compare the effects of market volatilities on Constellation Brands and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Harmony Gold.
Diversification Opportunities for Constellation Brands and Harmony Gold
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Constellation and Harmony is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Constellation Brands i.e., Constellation Brands and Harmony Gold go up and down completely randomly.
Pair Corralation between Constellation Brands and Harmony Gold
Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands Class is 2.8 times less risky than Harmony Gold. The stock trades about -0.02 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 372.00 in Harmony Gold Mining on October 23, 2024 and sell it today you would earn a total of 577.00 from holding Harmony Gold Mining or generate 155.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 65.25% |
| Values | Daily Returns |
Constellation Brands Class vs. Harmony Gold Mining
Performance |
| Timeline |
| Constellation Brands |
| Harmony Gold Mining |
Constellation Brands and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Harmony Gold
The main advantage of trading using opposite Constellation Brands and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman | Constellation Brands vs. Diageo PLC ADR |
| Harmony Gold vs. Constellation Brands Class | Harmony Gold vs. China Tontine Wines | Harmony Gold vs. Diamond Estates Wines | Harmony Gold vs. 51Talk Online Education |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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