Correlation Between Constellation Brands and SNDL
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and SNDL 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 SNDL 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 SNDL Inc, you can compare the effects of market volatilities on Constellation Brands and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and SNDL.
Diversification Opportunities for Constellation Brands and SNDL
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Constellation and SNDL is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Constellation Brands i.e., Constellation Brands and SNDL go up and down completely randomly.
Pair Corralation between Constellation Brands and SNDL
Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.3 times more return on investment than SNDL. However, Constellation Brands Class is 3.32 times less risky than SNDL. It trades about 0.09 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.08 per unit of risk. If you would invest 23,651 in Constellation Brands Class on August 28, 2024 and sell it today you would earn a total of 516.00 from holding Constellation Brands Class or generate 2.18% 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. SNDL Inc
Performance |
| Timeline |
| Constellation Brands |
| SNDL Inc |
Constellation Brands and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and SNDL
The main advantage of trading using opposite Constellation Brands and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |