Correlation Between Crimson Wine and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both Crimson Wine and Constellation Brands 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 Crimson Wine and Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crimson Wine and Constellation Brands Class, you can compare the effects of market volatilities on Crimson Wine and Constellation Brands 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 Crimson Wine with a short position of Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crimson Wine and Constellation Brands.
Diversification Opportunities for Crimson Wine and Constellation Brands
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crimson and Constellation is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands and Crimson Wine 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 Crimson Wine are associated (or correlated) with Constellation Brands. 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 has no effect on the direction of Crimson Wine i.e., Crimson Wine and Constellation Brands go up and down completely randomly.
Pair Corralation between Crimson Wine and Constellation Brands
Given the investment horizon of 90 days Crimson Wine is expected to generate 1.89 times more return on investment than Constellation Brands. However, Crimson Wine is 1.89 times more volatile than Constellation Brands Class. It trades about 0.06 of its potential returns per unit of risk. Constellation Brands Class is currently generating about -0.05 per unit of risk. If you would invest 595.00 in Crimson Wine on September 12, 2024 and sell it today you would earn a total of 44.00 from holding Crimson Wine or generate 7.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Crimson Wine vs. Constellation Brands Class
Performance |
Timeline |
Crimson Wine |
Constellation Brands |
Crimson Wine and Constellation Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Crimson Wine and Constellation Brands
The main advantage of trading using opposite Crimson Wine and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crimson Wine position performs unexpectedly, Constellation Brands 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 Brands will offset losses from the drop in Constellation Brands' long position.Crimson Wine vs. V Group | Crimson Wine vs. Fbec Worldwide | Crimson Wine vs. Hiru Corporation | Crimson Wine vs. Alkame Holdings |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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