Correlation Between Constellation Brands and New World
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and New World 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 New World 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 New World Development, you can compare the effects of market volatilities on Constellation Brands and New World 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 New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and New World.
Diversification Opportunities for Constellation Brands and New World
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Constellation and New is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and New World Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Development 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Development has no effect on the direction of Constellation Brands i.e., Constellation Brands and New World go up and down completely randomly.
Pair Corralation between Constellation Brands and New World
If you would invest 23,620 in Constellation Brands Class on September 12, 2024 and sell it today you would earn a total of 640.00 from holding Constellation Brands Class or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Constellation Brands Class vs. New World Development
Performance |
| Timeline |
| Constellation Brands |
| New World Development |
Constellation Brands and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and New World
The main advantage of trading using opposite Constellation Brands and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
| New World vs. Constellation Brands Class | New World vs. China Tontine Wines | New World vs. Diamond Estates Wines | New World vs. SNDL Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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