Correlation Between Constellation Brands and Funko

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

Diversification Opportunities for Constellation Brands and Funko

0.15

Correlation Coefficient

Constellation Brands  Funko

Average diversification

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

Pair Corralation between Constellation Brands and Funko

Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Funko. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands Class is 1.98 times less risky than Funko. The stock trades about -0.17 of its potential returns per unit of risk. The Funko Inc is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,061  in Funko Inc on September 23, 2024 and sell it today you would earn a total of  188.00  from holding Funko Inc or generate 17.72% return on investment over 90 days.

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

Constellation Brands Class  vs.  Funko Inc

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.

Funko Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Funko is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Constellation Brands and Funko

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

The idea behind Constellation Brands Class and Funko 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 Transaction History module to view history of all your transactions and understand their impact on performance.