Correlation Between Lakeland Industries and CONSTELLATION

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

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

Diversification Opportunities for Lakeland Industries and CONSTELLATION

0.16

Correlation Coefficient

Lakeland Industries  CONSTELLATION

Average diversification

The 3 months correlation between Lakeland and CONSTELLATION is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Industries 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 Lakeland Industries 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 Lakeland Industries 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 Lakeland Industries i.e., Lakeland Industries and CONSTELLATION go up and down completely randomly.

Pair Corralation between Lakeland Industries and CONSTELLATION

Given the investment horizon of 90 days Lakeland Industries is expected to generate 19.07 times more return on investment than CONSTELLATION. However, Lakeland Industries is 19.07 times more volatile than CONSTELLATION BRANDS INC. It trades about 0.23 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  2,308  in Lakeland Industries on October 5, 2024 and sell it today you would earn a total of  281.00  from holding Lakeland Industries or generate 12.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lakeland Industries  vs.  CONSTELLATION BRANDS INC

Lakeland Industries

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, Lakeland Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Lakeland Industries and CONSTELLATION

The main advantage of trading using opposite Lakeland Industries and CONSTELLATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Industries 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 Lakeland Industries 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.