Correlation Between Hudson Acquisition and CONSTELLATION

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

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

Diversification Opportunities for Hudson Acquisition and CONSTELLATION

0.0

Correlation Coefficient

Hudson Acquisition  CONSTELLATION

Pay attention - limited upside

The 3 months correlation between Hudson and CONSTELLATION is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Acquisition I 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 Hudson Acquisition 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 Hudson Acquisition I 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 Hudson Acquisition i.e., Hudson Acquisition and CONSTELLATION go up and down completely randomly.

Pair Corralation between Hudson Acquisition and CONSTELLATION

If you would invest  9,606  in CONSTELLATION BRANDS INC on December 26, 2024 and sell it today you would earn a total of  109.00  from holding CONSTELLATION BRANDS INC or generate 1.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Hudson Acquisition I  vs.  CONSTELLATION BRANDS INC

Hudson Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hudson Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Hudson Acquisition is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hudson Acquisition and CONSTELLATION

The main advantage of trading using opposite Hudson Acquisition and CONSTELLATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Acquisition 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 Hudson Acquisition I 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.