Correlation Between Constellation Brands and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee, you can compare the effects of market volatilities on Constellation Brands and Westrock Coffee 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 Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Westrock Coffee.
Diversification Opportunities for Constellation Brands and Westrock Coffee
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Constellation and Westrock is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Constellation Brands i.e., Constellation Brands and Westrock Coffee go up and down completely randomly.
Pair Corralation between Constellation Brands and Westrock Coffee
Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Westrock Coffee. In addition to that, Constellation Brands is 1.15 times more volatile than Westrock Coffee. It trades about -0.25 of its total potential returns per unit of risk. Westrock Coffee is currently generating about 0.03 per unit of volatility. If you would invest 628.00 in Westrock Coffee on October 21, 2024 and sell it today you would earn a total of 4.00 from holding Westrock Coffee or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Westrock Coffee
Performance |
| Timeline |
| Constellation Brands |
| Westrock Coffee |
Constellation Brands and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Westrock Coffee
The main advantage of trading using opposite Constellation Brands and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman | Constellation Brands vs. Diageo PLC ADR |
| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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