Correlation Between Constellation Brands and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture, you can compare the effects of market volatilities on Constellation Brands and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Hooker Furniture.
Diversification Opportunities for Constellation Brands and Hooker Furniture
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Constellation and Hooker is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Constellation Brands i.e., Constellation Brands and Hooker Furniture go up and down completely randomly.
Pair Corralation between Constellation Brands and Hooker Furniture
Considering the 90-day investment horizon Constellation Brands is expected to generate 5.14 times less return on investment than Hooker Furniture. But when comparing it to its historical volatility, Constellation Brands Class is 2.34 times less risky than Hooker Furniture. It trades about 0.02 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,409 in Hooker Furniture on August 30, 2024 and sell it today you would earn a total of 454.00 from holding Hooker Furniture or generate 32.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Hooker Furniture
Performance |
| Timeline |
| Constellation Brands |
| Hooker Furniture |
Constellation Brands and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Hooker Furniture
The main advantage of trading using opposite Constellation Brands and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.| Constellation Brands vs. Andrew Peller Limited | Constellation Brands vs. Naked Wines plc | Constellation Brands vs. Willamette Valley Vineyards | Constellation Brands vs. The Tinley Beverage |
| Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands | Hooker Furniture vs. La Z Boy Incorporated |
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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