Correlation Between CONSTELLATION and Sealed Air

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

Diversification Opportunities for CONSTELLATION and Sealed Air

0.1

Correlation Coefficient

CONSTELLATION  Sealed Air

Average diversification

The 3 months correlation between CONSTELLATION and Sealed is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of CONSTELLATION i.e., CONSTELLATION and Sealed Air go up and down completely randomly.

Pair Corralation between CONSTELLATION and Sealed Air

Assuming the 90 days trading horizon CONSTELLATION is expected to generate 3.26 times less return on investment than Sealed Air. But when comparing it to its historical volatility, CONSTELLATION BRANDS INC is 1.81 times less risky than Sealed Air. It trades about 0.07 of its potential returns per unit of risk. Sealed Air is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,359  in Sealed Air on October 21, 2024 and sell it today you would earn a total of  93.00  from holding Sealed Air or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  Sealed Air

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

Sealed Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sealed Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Sealed Air is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CONSTELLATION and Sealed Air

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

The idea behind CONSTELLATION BRANDS INC and Sealed Air 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..