Correlation Between Constellation Brands and Enlight Renewable

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

Diversification Opportunities for Constellation Brands and Enlight Renewable

0.16

Correlation Coefficient

Constellation Brands  Enlight Renewable

Average diversification

The 3 months correlation between Constellation and Enlight is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Constellation Brands i.e., Constellation Brands and Enlight Renewable go up and down completely randomly.

Pair Corralation between Constellation Brands and Enlight Renewable

Considering the 90-day investment horizon Constellation Brands is expected to generate 338.48 times less return on investment than Enlight Renewable. But when comparing it to its historical volatility, Constellation Brands Class is 52.34 times less risky than Enlight Renewable. It trades about 0.01 of its potential returns per unit of risk. Enlight Renewable Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  196.00  in Enlight Renewable Energy on September 21, 2024 and sell it today you would earn a total of  1,350  from holding Enlight Renewable Energy or generate 688.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Constellation Brands Class  vs.  Enlight Renewable Energy

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Enlight Renewable Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Constellation Brands and Enlight Renewable

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

The idea behind Constellation Brands Class and Enlight Renewable Energy 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.