Correlation Between Constellation Brands and Blade Air

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

By analyzing existing cross correlation between Constellation Brands Class and Blade Air Mobility, you can compare the effects of market volatilities on Constellation Brands and Blade Air 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 Constellation Brands with a short position of Blade Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Blade Air.

Diversification Opportunities for Constellation Brands and Blade Air

-0.15

Correlation Coefficient

Constellation Brands  Blade Air

Good diversification

The 3 months correlation between Constellation and Blade is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Blade Air Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blade Air Mobility and Constellation Brands 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 Constellation Brands Class are associated (or correlated) with Blade Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blade Air Mobility has no effect on the direction of Constellation Brands i.e., Constellation Brands and Blade Air go up and down completely randomly.

Pair Corralation between Constellation Brands and Blade Air

Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Blade Air. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands Class is 2.37 times less risky than Blade Air. The stock trades about -0.12 of its potential returns per unit of risk. The Blade Air Mobility is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  342.00  in Blade Air Mobility on October 26, 2024 and sell it today you would earn a total of  59.00  from holding Blade Air Mobility or generate 17.25% return on investment over 90 days.

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

Constellation Brands Class  vs.  Blade Air Mobility

Constellation Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Brands Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Blade Air Mobility

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blade Air Mobility are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Blade Air exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellation Brands and Blade Air

The main advantage of trading using opposite Constellation Brands and Blade Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Blade Air 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 Blade Air will offset losses from the drop in Blade Air's long position.

The idea behind Constellation Brands Class and Blade Air Mobility 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.