Correlation Between Constellation Brands and Hawesko Holding

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

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

Diversification Opportunities for Constellation Brands and Hawesko Holding

-0.08

Correlation Coefficient

Constellation Brands  Hawesko Holding

Good diversification

The 3 months correlation between Constellation and Hawesko is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands and Hawesko Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawesko Holding AG 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 Hawesko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawesko Holding AG has no effect on the direction of Constellation Brands i.e., Constellation Brands and Hawesko Holding go up and down completely randomly.

Pair Corralation between Constellation Brands and Hawesko Holding

Assuming the 90 days trading horizon Constellation Brands is expected to generate 0.58 times more return on investment than Hawesko Holding. However, Constellation Brands is 1.73 times less risky than Hawesko Holding. It trades about 0.03 of its potential returns per unit of risk. Hawesko Holding AG is currently generating about -0.02 per unit of risk. If you would invest  19,365  in Constellation Brands on September 28, 2024 and sell it today you would earn a total of  2,495  from holding Constellation Brands or generate 12.88% 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.  Hawesko Holding AG

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.

Hawesko Holding AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hawesko Holding AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hawesko Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Constellation Brands and Hawesko Holding

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

The idea behind Constellation Brands and Hawesko Holding AG 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.