Correlation Between Getty Realty and CONSTELLATION

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

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

Diversification Opportunities for Getty Realty and CONSTELLATION

0.38

Correlation Coefficient

Getty Realty  CONSTELLATION

Weak diversification

The 3 months correlation between Getty and CONSTELLATION is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty 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 Getty Realty 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 Getty Realty 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 Getty Realty i.e., Getty Realty and CONSTELLATION go up and down completely randomly.

Pair Corralation between Getty Realty and CONSTELLATION

Considering the 90-day investment horizon Getty Realty is expected to generate 4.34 times more return on investment than CONSTELLATION. However, Getty Realty is 4.34 times more volatile than CONSTELLATION BRANDS INC. It trades about -0.03 of its potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about -0.12 per unit of risk. If you would invest  3,058  in Getty Realty on October 5, 2024 and sell it today you would lose (65.00) from holding Getty Realty or give up 2.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Getty Realty  vs.  CONSTELLATION BRANDS INC

Getty Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getty Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Getty Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Getty Realty and CONSTELLATION

The main advantage of trading using opposite Getty Realty and CONSTELLATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Realty 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 Getty Realty 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.