Correlation Between Eltek and CONSTELLATION

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

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

Diversification Opportunities for Eltek and CONSTELLATION

0.21

Correlation Coefficient

Eltek  CONSTELLATION

Modest diversification

The 3 months correlation between Eltek and CONSTELLATION is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Eltek 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 Eltek 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 Eltek 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 Eltek i.e., Eltek and CONSTELLATION go up and down completely randomly.

Pair Corralation between Eltek and CONSTELLATION

Given the investment horizon of 90 days Eltek is expected to generate 15.51 times more return on investment than CONSTELLATION. However, Eltek is 15.51 times more volatile than CONSTELLATION BRANDS INC. It trades about 0.06 of its potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about 0.01 per unit of risk. If you would invest  444.00  in Eltek on October 21, 2024 and sell it today you would earn a total of  663.00  from holding Eltek or generate 149.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.76%
Values	Daily Returns

Eltek  vs.  CONSTELLATION BRANDS INC

Eltek

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Eltek may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CONSTELLATION BRANDS INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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 Eltek and CONSTELLATION

The main advantage of trading using opposite Eltek and CONSTELLATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek 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 Eltek 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.