Correlation Between Doubledown Interactive and CONSTELLATION

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

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

Diversification Opportunities for Doubledown Interactive and CONSTELLATION

0.46

Correlation Coefficient

Doubledown Interactive  CONSTELLATION

Very weak diversification

The 3 months correlation between Doubledown and CONSTELLATION is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Doubledown Interactive Co 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 Doubledown Interactive 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 Doubledown Interactive Co 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 Doubledown Interactive i.e., Doubledown Interactive and CONSTELLATION go up and down completely randomly.

Pair Corralation between Doubledown Interactive and CONSTELLATION

Considering the 90-day investment horizon Doubledown Interactive Co is expected to under-perform the CONSTELLATION. In addition to that, Doubledown Interactive is 2.6 times more volatile than CONSTELLATION BRANDS INC. It trades about -0.17 of its total potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about -0.09 per unit of volatility. If you would invest  8,893  in CONSTELLATION BRANDS INC on October 3, 2024 and sell it today you would lose (378.00) from holding CONSTELLATION BRANDS INC or give up 4.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	59.68%
Values	Daily Returns

Doubledown Interactive Co  vs.  CONSTELLATION BRANDS INC

Doubledown Interactive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Doubledown Interactive Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSTELLATION BRANDS INC investors.

Pair Trading with Doubledown Interactive and CONSTELLATION

The main advantage of trading using opposite Doubledown Interactive and CONSTELLATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doubledown Interactive 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 Doubledown Interactive Co 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.