Correlation Between Constellation Brands and Iconic Brands
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Iconic 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 Constellation Brands and Iconic Brands 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 Iconic Brands, you can compare the effects of market volatilities on Constellation Brands and Iconic 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 Constellation Brands with a short position of Iconic Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Iconic Brands.
Diversification Opportunities for Constellation Brands and Iconic Brands
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Constellation and Iconic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Iconic Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iconic Brands 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 Iconic Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iconic Brands has no effect on the direction of Constellation Brands i.e., Constellation Brands and Iconic Brands go up and down completely randomly.
Pair Corralation between Constellation Brands and Iconic Brands
Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.06 times more return on investment than Iconic Brands. However, Constellation Brands Class is 17.38 times less risky than Iconic Brands. It trades about 0.01 of its potential returns per unit of risk. Iconic Brands is currently generating about -0.21 per unit of risk. If you would invest 24,040 in Constellation Brands Class on August 24, 2024 and sell it today you would earn a total of 36.00 from holding Constellation Brands Class or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Constellation Brands Class vs. Iconic Brands
Performance |
| Timeline |
| Constellation Brands |
| Iconic Brands |
Constellation Brands and Iconic Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Iconic Brands
The main advantage of trading using opposite Constellation Brands and Iconic Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Iconic 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 Iconic Brands will offset losses from the drop in Iconic Brands' long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
| Iconic Brands vs. Diageo PLC ADR | Iconic Brands vs. Constellation Brands Class | Iconic Brands vs. Thai Beverage PCL | Iconic Brands vs. Morningstar Unconstrained Allocation |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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