Correlation Between Village Super and Constellation Brands

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Can any of the company-specific risk be diversified away by investing in both Village Super and Constellation Brands 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 Village Super and Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Village Super Market and Constellation Brands Class, you can compare the effects of market volatilities on Village Super and Constellation Brands 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 Village Super with a short position of Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Village Super and Constellation Brands.

Diversification Opportunities for Village Super and Constellation Brands

VillageConstellationDiversified AwayVillageConstellationDiversified Away100%
-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Village and Constellation is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands and Village Super 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 Village Super Market are associated (or correlated) with Constellation Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Brands has no effect on the direction of Village Super i.e., Village Super and Constellation Brands go up and down completely randomly.

Pair Corralation between Village Super and Constellation Brands

Assuming the 90 days horizon Village Super Market is expected to under-perform the Constellation Brands. But the stock apears to be less risky and, when comparing its historical volatility, Village Super Market is 1.24 times less risky than Constellation Brands. The stock trades about -0.06 of its potential returns per unit of risk. The Constellation Brands Class is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  17,790  in Constellation Brands Class on November 23, 2024 and sell it today you would lose (164.00) from holding Constellation Brands Class or give up 0.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Village Super Market  vs.  Constellation Brands Class

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-100
JavaScript chart by amCharts 3.21.15VLGEA STZ
       Timeline  
Village Super Market 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Village Super Market has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Village Super is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb303132333435
Constellation Brands 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Constellation Brands Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb160170180190200210220230240

Village Super and Constellation Brands Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.9-4.42-2.94-1.460.01.482.964.445.92 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15VLGEA STZ
       Returns  

Pair Trading with Village Super and Constellation Brands

The main advantage of trading using opposite Village Super and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Super position performs unexpectedly, Constellation Brands 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 Constellation Brands will offset losses from the drop in Constellation Brands' long position.
The idea behind Village Super Market and Constellation Brands Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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