Correlation Between Barings BDC and CONSTELLATION

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

By analyzing existing cross correlation between Barings BDC and CONSTELLATION BRANDS INC, you can compare the effects of market volatilities on Barings BDC and CONSTELLATION 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 Barings BDC with a short position of CONSTELLATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and CONSTELLATION.

Diversification Opportunities for Barings BDC and CONSTELLATION

0.04

Correlation Coefficient

Barings BDC  CONSTELLATION

Significant diversification

The 3 months correlation between Barings and CONSTELLATION is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and CONSTELLATION BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION BRANDS INC and Barings BDC 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 Barings BDC are associated (or correlated) with CONSTELLATION. 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 INC has no effect on the direction of Barings BDC i.e., Barings BDC and CONSTELLATION go up and down completely randomly.

Pair Corralation between Barings BDC and CONSTELLATION

Given the investment horizon of 90 days Barings BDC is expected to generate 1.94 times less return on investment than CONSTELLATION. But when comparing it to its historical volatility, Barings BDC is 2.18 times less risky than CONSTELLATION. It trades about 0.2 of its potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,294  in CONSTELLATION BRANDS INC on October 22, 2024 and sell it today you would earn a total of  221.00  from holding CONSTELLATION BRANDS INC or generate 2.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	47.37%
Values	Daily Returns

Barings BDC  vs.  CONSTELLATION BRANDS INC

Barings BDC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Barings BDC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barings BDC and CONSTELLATION

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

The idea behind Barings BDC and CONSTELLATION BRANDS INC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..