Correlation Between Teleflex Incorporated and CONSTELLATION

Can any of the company-specific risk be diversified away by investing in both Teleflex Incorporated and CONSTELLATION 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 Teleflex Incorporated and CONSTELLATION into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teleflex Incorporated and CONSTELLATION BRANDS INC, you can compare the effects of market volatilities on Teleflex Incorporated and CONSTELLATION 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 Teleflex Incorporated with a short position of CONSTELLATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teleflex Incorporated and CONSTELLATION.

Diversification Opportunities for Teleflex Incorporated and CONSTELLATION

0.28

Correlation Coefficient

Teleflex Incorporated  CONSTELLATION

Modest diversification

The 3 months correlation between Teleflex and CONSTELLATION is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated and CONSTELLATION BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION BRANDS INC and Teleflex Incorporated 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 Teleflex Incorporated are associated (or correlated) with CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION BRANDS INC has no effect on the direction of Teleflex Incorporated i.e., Teleflex Incorporated and CONSTELLATION go up and down completely randomly.

Pair Corralation between Teleflex Incorporated and CONSTELLATION

Considering the 90-day investment horizon Teleflex Incorporated is expected to generate 1.53 times more return on investment than CONSTELLATION. However, Teleflex Incorporated is 1.53 times more volatile than CONSTELLATION BRANDS INC. It trades about 0.08 of its potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about -0.19 per unit of risk. If you would invest  17,825  in Teleflex Incorporated on October 23, 2024 and sell it today you would earn a total of  302.00  from holding Teleflex Incorporated or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Teleflex Incorporated  vs.  CONSTELLATION BRANDS INC

Teleflex Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleflex Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental 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.

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teleflex Incorporated and CONSTELLATION

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

The idea behind Teleflex Incorporated and CONSTELLATION BRANDS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.