Correlation Between Constellation Brands and Vintage Wine
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Vintage Wine 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 Vintage Wine 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 Vintage Wine Estates, you can compare the effects of market volatilities on Constellation Brands and Vintage Wine 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 Vintage Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Vintage Wine.
Diversification Opportunities for Constellation Brands and Vintage Wine
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Constellation and Vintage is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Vintage Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vintage Wine Estates 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 Vintage Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vintage Wine Estates has no effect on the direction of Constellation Brands i.e., Constellation Brands and Vintage Wine go up and down completely randomly.
Pair Corralation between Constellation Brands and Vintage Wine
Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.13 times more return on investment than Vintage Wine. However, Constellation Brands Class is 7.89 times less risky than Vintage Wine. It trades about -0.21 of its potential returns per unit of risk. Vintage Wine Estates is currently generating about -0.27 per unit of risk. If you would invest 26,600 in Constellation Brands Class on February 1, 2024 and sell it today you would lose (1,254) from holding Constellation Brands Class or give up 4.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Constellation Brands Class vs. Vintage Wine Estates
Performance |
Timeline |
Constellation Brands |
Vintage Wine Estates |
Constellation Brands and Vintage Wine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Constellation Brands and Vintage Wine
The main advantage of trading using opposite Constellation Brands and Vintage Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Vintage Wine 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 Vintage Wine will offset losses from the drop in Vintage Wine's long position.Constellation Brands vs. Vintage Wine Estates | Constellation Brands vs. Pernod Ricard SA | Constellation Brands vs. Pernod Ricard SA |
Vintage Wine vs. Andrew Peller Limited | Vintage Wine vs. Naked Wines plc | Vintage Wine vs. Willamette Valley Vineyards | Vintage Wine vs. The Tinley Beverage |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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