Correlation Between Constellation Brands and Suburban Propane

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

Diversification Opportunities for Constellation Brands and Suburban Propane

-0.15

Correlation Coefficient

Constellation Brands  Suburban Propane

Good diversification

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

Pair Corralation between Constellation Brands and Suburban Propane

Considering the 90-day investment horizon Constellation Brands Class is expected to under-perform the Suburban Propane. In addition to that, Constellation Brands is 1.34 times more volatile than Suburban Propane Partners. It trades about -0.16 of its total potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.08 per unit of volatility. If you would invest  1,842  in Suburban Propane Partners on October 23, 2024 and sell it today you would earn a total of  143.00  from holding Suburban Propane Partners or generate 7.76% return on investment over 90 days.

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

Constellation Brands Class  vs.  Suburban Propane Partners

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.

Suburban Propane Partners

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Suburban Propane may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Constellation Brands and Suburban Propane

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

The idea behind Constellation Brands Class and Suburban Propane Partners 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.