Correlation Between CONSTELLATION and National Vision

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

Diversification Opportunities for CONSTELLATION and National Vision

0.55

Correlation Coefficient

CONSTELLATION  National Vision

Very weak diversification

The 3 months correlation between CONSTELLATION and National is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of CONSTELLATION i.e., CONSTELLATION and National Vision go up and down completely randomly.

Pair Corralation between CONSTELLATION and National Vision

Assuming the 90 days trading horizon CONSTELLATION BRANDS INC is expected to under-perform the National Vision. But the bond apears to be less risky and, when comparing its historical volatility, CONSTELLATION BRANDS INC is 2.87 times less risky than National Vision. The bond trades about -0.57 of its potential returns per unit of risk. The National Vision Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,125  in National Vision Holdings on October 5, 2024 and sell it today you would lose (37.00) from holding National Vision Holdings or give up 3.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	52.38%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  National Vision Holdings

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 latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSTELLATION BRANDS INC investors.

National Vision Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, National Vision may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CONSTELLATION and National Vision

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

The idea behind CONSTELLATION BRANDS INC and National Vision 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.