Correlation Between Tilray and Constellium

Can any of the company-specific risk be diversified away by investing in both Tilray and Constellium 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 Tilray and Constellium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tilray Inc and Constellium Nv, you can compare the effects of market volatilities on Tilray and Constellium 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 Tilray with a short position of Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tilray and Constellium.

Diversification Opportunities for Tilray and Constellium

0.56

Correlation Coefficient

Tilray  Constellium

Very weak diversification

The 3 months correlation between Tilray and Constellium is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv and Tilray 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 Tilray Inc are associated (or correlated) with Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Tilray i.e., Tilray and Constellium go up and down completely randomly.

Pair Corralation between Tilray and Constellium

Given the investment horizon of 90 days Tilray Inc is expected to under-perform the Constellium. But the stock apears to be less risky and, when comparing its historical volatility, Tilray Inc is 1.37 times less risky than Constellium. The stock trades about -0.16 of its potential returns per unit of risk. The Constellium Nv is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,610  in Constellium Nv on August 18, 2024 and sell it today you would lose (464.00) from holding Constellium Nv or give up 28.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Tilray Inc  vs.  Constellium Nv

Tilray Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tilray Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Constellium Nv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellium Nv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tilray and Constellium

The main advantage of trading using opposite Tilray and Constellium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tilray position performs unexpectedly, Constellium 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 Constellium will offset losses from the drop in Constellium's long position.

The idea behind Tilray Inc and Constellium Nv 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.