Correlation Between Constellation Brands and Marie Brizard

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

By analyzing existing cross correlation between Constellation Brands and Marie Brizard Wine, you can compare the effects of market volatilities on Constellation Brands and Marie Brizard 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 Marie Brizard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Marie Brizard.

Diversification Opportunities for Constellation Brands and Marie Brizard

-0.19

Correlation Coefficient

Constellation Brands  Marie Brizard

Good diversification

The 3 months correlation between Constellation and Marie is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands and Marie Brizard Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marie Brizard Wine 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 are associated (or correlated) with Marie Brizard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marie Brizard Wine has no effect on the direction of Constellation Brands i.e., Constellation Brands and Marie Brizard go up and down completely randomly.

Pair Corralation between Constellation Brands and Marie Brizard

Assuming the 90 days trading horizon Constellation Brands is expected to generate 3.87 times less return on investment than Marie Brizard. But when comparing it to its historical volatility, Constellation Brands is 1.3 times less risky than Marie Brizard. It trades about 0.03 of its potential returns per unit of risk. Marie Brizard Wine is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Marie Brizard Wine on September 28, 2024 and sell it today you would earn a total of  162.00  from holding Marie Brizard Wine or generate 73.64% return on investment over 90 days.

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

Constellation Brands  vs.  Marie Brizard Wine

Constellation Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Constellation Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Marie Brizard Wine

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marie Brizard Wine are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Marie Brizard is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Constellation Brands and Marie Brizard

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

The idea behind Constellation Brands and Marie Brizard Wine 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.