Correlation Between Constellation Brands and Legacy Education
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Legacy Education 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 Legacy Education 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 Legacy Education, you can compare the effects of market volatilities on Constellation Brands and Legacy Education 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 Legacy Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Legacy Education.
Diversification Opportunities for Constellation Brands and Legacy Education
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Constellation and Legacy is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Legacy Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education 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 Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education has no effect on the direction of Constellation Brands i.e., Constellation Brands and Legacy Education go up and down completely randomly.
Pair Corralation between Constellation Brands and Legacy Education
Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Legacy Education. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands Class is 1.44 times less risky than Legacy Education. The stock trades about -0.3 of its potential returns per unit of risk. The Legacy Education is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 898.00 in Legacy Education on October 17, 2024 and sell it today you would lose (118.00) from holding Legacy Education or give up 13.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Legacy Education
Performance |
| Timeline |
| Constellation Brands |
| Legacy Education |
Constellation Brands and Legacy Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Legacy Education
The main advantage of trading using opposite Constellation Brands and Legacy Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Legacy Education 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 Legacy Education will offset losses from the drop in Legacy Education's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman | Constellation Brands vs. Diageo PLC ADR |
| Legacy Education vs. Constellation Brands Class | Legacy Education vs. Analog Devices | Legacy Education vs. ServiceNow | Legacy Education vs. National Beverage Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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