Correlation Between Miller Opportunity and CONSTELLATION

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

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

Diversification Opportunities for Miller Opportunity and CONSTELLATION

-0.52

Correlation Coefficient

Miller Opportunity  CONSTELLATION

Excellent diversification

The 3 months correlation between Miller and CONSTELLATION is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Miller Opportunity Trust 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 Miller Opportunity 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 Miller Opportunity Trust 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 Miller Opportunity i.e., Miller Opportunity and CONSTELLATION go up and down completely randomly.

Pair Corralation between Miller Opportunity and CONSTELLATION

Assuming the 90 days horizon Miller Opportunity is expected to generate 105.73 times less return on investment than CONSTELLATION. But when comparing it to its historical volatility, Miller Opportunity Trust is 76.39 times less risky than CONSTELLATION. It trades about 0.07 of its potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10,092  in CONSTELLATION BRANDS INC on October 3, 2024 and sell it today you would lose (335.00) from holding CONSTELLATION BRANDS INC or give up 3.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	72.12%
Values	Daily Returns

Miller Opportunity Trust  vs.  CONSTELLATION BRANDS INC

Miller Opportunity Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Miller Opportunity Trust are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Miller Opportunity 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Miller Opportunity and CONSTELLATION

The main advantage of trading using opposite Miller Opportunity and CONSTELLATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Opportunity 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 Miller Opportunity Trust 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.