Correlation Between Constellation Brands and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Westinghouse Air 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 Westinghouse Air 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 Westinghouse Air Brake, you can compare the effects of market volatilities on Constellation Brands and Westinghouse Air 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 Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Westinghouse Air.
Diversification Opportunities for Constellation Brands and Westinghouse Air
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Constellation and Westinghouse is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Constellation Brands i.e., Constellation Brands and Westinghouse Air go up and down completely randomly.
Pair Corralation between Constellation Brands and Westinghouse Air
Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.71 times more return on investment than Westinghouse Air. However, Constellation Brands Class is 1.41 times less risky than Westinghouse Air. It trades about 0.23 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about -0.23 per unit of risk. If you would invest 16,996 in Constellation Brands Class on December 8, 2024 and sell it today you would earn a total of 1,629 from holding Constellation Brands Class or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Westinghouse Air Brake
Performance |
| Timeline |
| Constellation Brands |
| Westinghouse Air Brake |
Constellation Brands and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Westinghouse Air
The main advantage of trading using opposite Constellation Brands and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman | Constellation Brands vs. Diageo PLC ADR |
| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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