Correlation Between Constellation Brands and Foxx Development

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

Diversification Opportunities for Constellation Brands and Foxx Development

0.48

Correlation Coefficient

Constellation Brands  Foxx Development

Very weak diversification

The 3 months correlation between Constellation and Foxx is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Foxx Development Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxx Development Holdings 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 Foxx Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxx Development Holdings has no effect on the direction of Constellation Brands i.e., Constellation Brands and Foxx Development go up and down completely randomly.

Pair Corralation between Constellation Brands and Foxx Development

Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.21 times more return on investment than Foxx Development. However, Constellation Brands Class is 4.67 times less risky than Foxx Development. It trades about -0.16 of its potential returns per unit of risk. Foxx Development Holdings is currently generating about -0.06 per unit of risk. If you would invest  24,040  in Constellation Brands Class on October 23, 2024 and sell it today you would lose (5,609) from holding Constellation Brands Class or give up 23.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Constellation Brands Class  vs.  Foxx Development Holdings

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.

Foxx Development Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxx Development Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Pair Trading with Constellation Brands and Foxx Development

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

The idea behind Constellation Brands Class and Foxx Development Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.