Correlation Between Constellation Brands and Oatly Group
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Oatly Group 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 Oatly Group 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 Oatly Group AB, you can compare the effects of market volatilities on Constellation Brands and Oatly Group 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 Oatly Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Oatly Group.
Diversification Opportunities for Constellation Brands and Oatly Group
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Constellation and Oatly is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB 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 Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Constellation Brands i.e., Constellation Brands and Oatly Group go up and down completely randomly.
Pair Corralation between Constellation Brands and Oatly Group
Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Oatly Group. In addition to that, Constellation Brands is 1.37 times more volatile than Oatly Group AB. It trades about -0.21 of its total potential returns per unit of risk. Oatly Group AB is currently generating about -0.11 per unit of volatility. If you would invest 72.00 in Oatly Group AB on November 2, 2024 and sell it today you would lose (5.00) from holding Oatly Group AB or give up 6.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Oatly Group AB
Performance |
| Timeline |
| Constellation Brands |
| Oatly Group AB |
Constellation Brands and Oatly Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Oatly Group
The main advantage of trading using opposite Constellation Brands and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Oatly Group 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 Oatly Group will offset losses from the drop in Oatly Group's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman | Constellation Brands vs. Diageo PLC ADR |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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