Correlation Between CONSTELLATION and SLR Investment

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

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

Diversification Opportunities for CONSTELLATION and SLR Investment

0.2

Correlation Coefficient

CONSTELLATION  SLR Investment

Modest diversification

The 3 months correlation between CONSTELLATION and SLR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp and CONSTELLATION 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 INC are associated (or correlated) with SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of CONSTELLATION i.e., CONSTELLATION and SLR Investment go up and down completely randomly.

Pair Corralation between CONSTELLATION and SLR Investment

Assuming the 90 days trading horizon CONSTELLATION BRANDS INC is expected to under-perform the SLR Investment. But the bond apears to be less risky and, when comparing its historical volatility, CONSTELLATION BRANDS INC is 1.86 times less risky than SLR Investment. The bond trades about -0.06 of its potential returns per unit of risk. The SLR Investment Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,597  in SLR Investment Corp on December 25, 2024 and sell it today you would earn a total of  104.00  from holding SLR Investment Corp or generate 6.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  SLR Investment Corp

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

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 recent stock price disturbance, may contribute to short-term losses for the investors.

SLR Investment Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, SLR Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CONSTELLATION and SLR Investment

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

The idea behind CONSTELLATION BRANDS INC and SLR Investment Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.