Correlation Between Constellation Brands and Hunter Creek

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Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Hunter Creek 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 Hunter Creek 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 Hunter Creek Mining, you can compare the effects of market volatilities on Constellation Brands and Hunter Creek 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 Hunter Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Hunter Creek.

Diversification Opportunities for Constellation Brands and Hunter Creek

ConstellationHunterDiversified AwayConstellationHunterDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Constellation and Hunter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Hunter Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Creek 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 Hunter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Creek Mining has no effect on the direction of Constellation Brands i.e., Constellation Brands and Hunter Creek go up and down completely randomly.

Pair Corralation between Constellation Brands and Hunter Creek

Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.36 times more return on investment than Hunter Creek. However, Constellation Brands Class is 2.78 times less risky than Hunter Creek. It trades about -0.02 of its potential returns per unit of risk. Hunter Creek Mining is currently generating about -0.05 per unit of risk. If you would invest  21,212  in Constellation Brands Class on November 26, 2024 and sell it today you would lose (3,315) from holding Constellation Brands Class or give up 15.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.2%
ValuesDaily Returns

Constellation Brands Class  vs.  Hunter Creek Mining

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-25-20-15-10-50
JavaScript chart by amCharts 3.21.15STZ HTRC
       Timeline  
Constellation Brands 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Constellation Brands Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb160170180190200210220230240
Hunter Creek Mining 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hunter Creek Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hunter Creek is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0980.0985

Constellation Brands and Hunter Creek Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.43-3.31-2.2-1.090.01560.931.872.83.74 0.010.020.030.040.050.06
JavaScript chart by amCharts 3.21.15STZ HTRC
       Returns  

Pair Trading with Constellation Brands and Hunter Creek

The main advantage of trading using opposite Constellation Brands and Hunter Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Hunter Creek 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 Hunter Creek will offset losses from the drop in Hunter Creek's long position.
The idea behind Constellation Brands Class and Hunter Creek Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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