Correlation Between Constellation Brands and One Gas

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

Diversification Opportunities for Constellation Brands and One Gas

-0.54

Correlation Coefficient

Constellation Brands  One Gas

Excellent diversification

The 3 months correlation between Constellation and One is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and One Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Gas 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 One Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Gas has no effect on the direction of Constellation Brands i.e., Constellation Brands and One Gas go up and down completely randomly.

Pair Corralation between Constellation Brands and One Gas

Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the One Gas. In addition to that, Constellation Brands is 2.11 times more volatile than One Gas. It trades about -0.09 of its total potential returns per unit of risk. One Gas is currently generating about 0.13 per unit of volatility. If you would invest  6,872  in One Gas on December 29, 2024 and sell it today you would earn a total of  724.00  from holding One Gas or generate 10.54% return on investment over 90 days.

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

Constellation Brands Class  vs.  One Gas

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.

One Gas

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in One Gas are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, One Gas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Constellation Brands and One Gas

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

The idea behind Constellation Brands Class and One Gas 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.