Correlation Between Constellation Brands and Stepstone
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Stepstone 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 Stepstone 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 Stepstone Group, you can compare the effects of market volatilities on Constellation Brands and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Stepstone.
Diversification Opportunities for Constellation Brands and Stepstone
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Constellation and Stepstone is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Constellation Brands i.e., Constellation Brands and Stepstone go up and down completely randomly.
Pair Corralation between Constellation Brands and Stepstone
Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.67 times more return on investment than Stepstone. However, Constellation Brands Class is 1.5 times less risky than Stepstone. It trades about 0.03 of its potential returns per unit of risk. Stepstone Group is currently generating about -0.21 per unit of risk. If you would invest 23,829 in Constellation Brands Class on September 13, 2024 and sell it today you would earn a total of 160.00 from holding Constellation Brands Class or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Stepstone Group
Performance |
| Timeline |
| Constellation Brands |
| Stepstone Group |
Constellation Brands and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Stepstone
The main advantage of trading using opposite Constellation Brands and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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