Correlation Between Constellation Brands and Selina Hospitality
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Selina Hospitality 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 Selina Hospitality 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 Selina Hospitality PLC, you can compare the effects of market volatilities on Constellation Brands and Selina Hospitality 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 Selina Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Selina Hospitality.
Diversification Opportunities for Constellation Brands and Selina Hospitality
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Constellation and Selina is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Selina Hospitality PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selina Hospitality PLC 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 Selina Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selina Hospitality PLC has no effect on the direction of Constellation Brands i.e., Constellation Brands and Selina Hospitality go up and down completely randomly.
Pair Corralation between Constellation Brands and Selina Hospitality
Considering the 90-day investment horizon Constellation Brands is expected to generate 575.01 times less return on investment than Selina Hospitality. But when comparing it to its historical volatility, Constellation Brands Class is 55.57 times less risky than Selina Hospitality. It trades about 0.01 of its potential returns per unit of risk. Selina Hospitality PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1.27 in Selina Hospitality PLC on September 12, 2024 and sell it today you would lose (0.27) from holding Selina Hospitality PLC or give up 21.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 2.42% |
| Values | Daily Returns |
Constellation Brands Class vs. Selina Hospitality PLC
Performance |
| Timeline |
| Constellation Brands |
| Selina Hospitality PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Constellation Brands and Selina Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Selina Hospitality
The main advantage of trading using opposite Constellation Brands and Selina Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Selina Hospitality 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 Selina Hospitality will offset losses from the drop in Selina Hospitality's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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