Correlation Between Constellation Brands and Sea
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Sea 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 Sea 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 Sea, you can compare the effects of market volatilities on Constellation Brands and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Sea.
Diversification Opportunities for Constellation Brands and Sea
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Constellation and Sea is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Constellation Brands i.e., Constellation Brands and Sea go up and down completely randomly.
Pair Corralation between Constellation Brands and Sea
Considering the 90-day investment horizon Constellation Brands is expected to generate 34.93 times less return on investment than Sea. But when comparing it to its historical volatility, Constellation Brands Class is 2.75 times less risky than Sea. It trades about 0.0 of its potential returns per unit of risk. Sea is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,503 in Sea on September 4, 2024 and sell it today you would earn a total of 4,821 from holding Sea or generate 74.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Sea
Performance |
| Timeline |
| Constellation Brands |
| Sea |
Constellation Brands and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Sea
The main advantage of trading using opposite Constellation Brands and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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