Correlation Between Constellation Brands and Conduit Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Conduit Pharmaceuticals 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 Conduit Pharmaceuticals 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 Conduit Pharmaceuticals, you can compare the effects of market volatilities on Constellation Brands and Conduit Pharmaceuticals 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 Conduit Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Conduit Pharmaceuticals.

Diversification Opportunities for Constellation Brands and Conduit Pharmaceuticals

-0.25

Correlation Coefficient

Constellation Brands  Conduit Pharmaceuticals

Very good diversification

The 3 months correlation between Constellation and Conduit is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Conduit Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conduit Pharmaceuticals 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 Conduit Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conduit Pharmaceuticals has no effect on the direction of Constellation Brands i.e., Constellation Brands and Conduit Pharmaceuticals go up and down completely randomly.

Pair Corralation between Constellation Brands and Conduit Pharmaceuticals

Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Conduit Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands Class is 5.97 times less risky than Conduit Pharmaceuticals. The stock trades about -0.13 of its potential returns per unit of risk. The Conduit Pharmaceuticals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.70  in Conduit Pharmaceuticals on December 22, 2024 and sell it today you would earn a total of  0.55  from holding Conduit Pharmaceuticals or generate 78.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

Constellation Brands Class  vs.  Conduit Pharmaceuticals

Constellation Brands

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Conduit Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Conduit Pharmaceuticals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Conduit Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellation Brands and Conduit Pharmaceuticals

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

The idea behind Constellation Brands Class and Conduit Pharmaceuticals 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.