Correlation Between Constellation Brands and Rmy Cointreau
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Rmy Cointreau 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 Rmy Cointreau 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 Rmy Cointreau SA, you can compare the effects of market volatilities on Constellation Brands and Rmy Cointreau 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 Rmy Cointreau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Rmy Cointreau.
Diversification Opportunities for Constellation Brands and Rmy Cointreau
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Constellation and Rmy is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Rmy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmy Cointreau SA 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 Rmy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmy Cointreau SA has no effect on the direction of Constellation Brands i.e., Constellation Brands and Rmy Cointreau go up and down completely randomly.
Pair Corralation between Constellation Brands and Rmy Cointreau
Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Rmy Cointreau. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands Class is 1.63 times less risky than Rmy Cointreau. The stock trades about -0.02 of its potential returns per unit of risk. The Rmy Cointreau SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,585 in Rmy Cointreau SA on September 13, 2024 and sell it today you would earn a total of 77.00 from holding Rmy Cointreau SA or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Rmy Cointreau SA
Performance |
| Timeline |
| Constellation Brands |
| Rmy Cointreau SA |
Constellation Brands and Rmy Cointreau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Rmy Cointreau
The main advantage of trading using opposite Constellation Brands and Rmy Cointreau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Rmy Cointreau 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 Rmy Cointreau will offset losses from the drop in Rmy Cointreau's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
| Rmy Cointreau vs. Remy Cointreau SA | Rmy Cointreau vs. Pernod Ricard SA | Rmy Cointreau vs. Carlsberg AS | Rmy Cointreau vs. Heineken Holding NV |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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