Correlation Between Constellation Brands and Rackspace Technology
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Rackspace Technology 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 Rackspace Technology 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 Rackspace Technology, you can compare the effects of market volatilities on Constellation Brands and Rackspace Technology 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 Rackspace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Rackspace Technology.
Diversification Opportunities for Constellation Brands and Rackspace Technology
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Constellation and Rackspace is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology 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 Rackspace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackspace Technology has no effect on the direction of Constellation Brands i.e., Constellation Brands and Rackspace Technology go up and down completely randomly.
Pair Corralation between Constellation Brands and Rackspace Technology
Considering the 90-day investment horizon Constellation Brands is expected to generate 32.32 times less return on investment than Rackspace Technology. But when comparing it to its historical volatility, Constellation Brands Class is 5.01 times less risky than Rackspace Technology. It trades about 0.01 of its potential returns per unit of risk. Rackspace Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 162.00 in Rackspace Technology on August 31, 2024 and sell it today you would earn a total of 106.00 from holding Rackspace Technology or generate 65.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Rackspace Technology
Performance |
| Timeline |
| Constellation Brands |
| Rackspace Technology |
Constellation Brands and Rackspace Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Rackspace Technology
The main advantage of trading using opposite Constellation Brands and Rackspace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Rackspace Technology 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 Rackspace Technology will offset losses from the drop in Rackspace Technology's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
| Rackspace Technology vs. GigaCloud Technology Class | Rackspace Technology vs. Alarum Technologies | Rackspace Technology vs. Stem Inc | Rackspace Technology vs. Pagaya Technologies |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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