Correlation Between Gap, and CONSTELLATION

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

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

Diversification Opportunities for Gap, and CONSTELLATION

0.02

Correlation Coefficient

Gap,  CONSTELLATION

Significant diversification

The 3 months correlation between Gap, and CONSTELLATION is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, 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 Gap, 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 The Gap, 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 Gap, i.e., Gap, and CONSTELLATION go up and down completely randomly.

Pair Corralation between Gap, and CONSTELLATION

Considering the 90-day investment horizon The Gap, is expected to under-perform the CONSTELLATION. In addition to that, Gap, is 2.98 times more volatile than CONSTELLATION BRANDS INC. It trades about -0.05 of its total potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about 0.07 per unit of volatility. If you would invest  9,206  in CONSTELLATION BRANDS INC on October 21, 2024 and sell it today you would earn a total of  68.00  from holding CONSTELLATION BRANDS INC or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

The Gap,  vs.  CONSTELLATION BRANDS INC

Gap,

Risk-Adjusted Performance

3 of 100

Insignificant

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

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 somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gap, and CONSTELLATION

The main advantage of trading using opposite Gap, and CONSTELLATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, 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 The Gap, 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.