Correlation Between Constellation Brands and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Willamette Valley 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 Willamette Valley 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 Willamette Valley Vineyards, you can compare the effects of market volatilities on Constellation Brands and Willamette Valley 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 Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Willamette Valley.
Diversification Opportunities for Constellation Brands and Willamette Valley
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Constellation and Willamette is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Constellation Brands i.e., Constellation Brands and Willamette Valley go up and down completely randomly.
Pair Corralation between Constellation Brands and Willamette Valley
Considering the 90-day investment horizon Constellation Brands is expected to generate 3.85 times less return on investment than Willamette Valley. But when comparing it to its historical volatility, Constellation Brands Class is 2.21 times less risky than Willamette Valley. It trades about 0.06 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 357.00 in Willamette Valley Vineyards on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Willamette Valley Vineyards or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Constellation Brands |
| Willamette Valley |
Constellation Brands and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Willamette Valley
The main advantage of trading using opposite Constellation Brands and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley's long position.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Pernod Ricard SA | Willamette Valley vs. Brown Forman | Willamette Valley vs. Treasury Wine Estates |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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